Is asset-based lending cheaper than cash flow lending?

Asset-based lending usually carries a lower headline rate, because the lender holds a claim on identifiable collateral. Total cost often tells a different story: ABL adds field exams, appraisals, borrowing-base certificates, and ongoing collateral monitoring. For asset-light borrowers, a cash flow structure is frequently cheaper in practice because an ABL borrowing base against thin collateral produces too little availability to justify those fixed costs.