Asset-Backed Securities vs. Asset-Based Lending


Summary

This practice note discusses the difference between asset-backed securities and asset-based loans. Asset-backed securities (ABS) and asset-based lending (ABL) are similar terms involving financial products that are sometimes confused with each other. Both "asset-based" and "asset-backed" refer to the fact that the financial product is collateralized by specific pools or categories of assets or property. However, the underlying product—a security, in the case of ABS, versus a loan, in the case of ABL—is an important distinguishing factor between these specific forms of financial products. This practice note also discusses the difference between cash flow-based credit facilities and ABL facilities.