An asset-based line at 11% can cost you 35%, and the day after your biggest purchase order it grows by exactly nothing. When a line sized on what you already own is the right tool, and when it is not.
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An asset-based line at 11% can cost you 35%.
The rate is the price of a dollar drawn for a year. A facility also charges for dollars you did not draw: a fee on the whole line, and interest on a minimum balance. Use a large line lightly and the arithmetic turns over. Use it heavily and it is the cheapest money a consumer brand can get, cheaper than ours.
Dwight Funding is the best-known asset-based lender to consumer brands, and if you are past a few million in revenue you have probably been told to talk to them. It is good advice for a lot of companies. This post is about working out whether yours is one of them, and about the one thing an asset-based line structurally cannot do: fund the order you won this morning. We are one of the two companies in the title, so check our work. Everything about asset-based lending here comes from Dwight's own published pages and the OCC's handbook for bank examiners. It is not legal or financial advice.
It ships in 90 days. Between now and then you have to buy ingredients and packaging, book the co-packer and pay freight: $360,000 to make it. That is the money you are looking for, and you need it now, not when the invoice is raised.
The lender's question is what the company has today that could be collected or sold. It looks at the invoices your customers owe you, $400,000, and the finished goods in your warehouse, $300,000. Both are pledged to the line.
$340,000 against the receivables and $165,000 against the inventory makes a borrowing base of $505,000, before ineligible invoices and reserves come out. If you are an established brand, most of that is already drawn. It is funding the business you have.
A purchase order is a promise to buy goods that do not exist. It is not a receivable and it is not inventory, so it does not enter the formula. Your availability the day after the biggest order in the company's history is exactly what it was the day before. It rises later, once you have found the money to make the goods.
If you do not have the line yet, there is diligence, a field exam, an inventory appraisal, legal documents and a lockbox to set up. Dwight's own guidance is to plan on a month from term sheet to close.1 That is quick for the category, and a third of your 90 days.
Spring underwrites the order itself and the retailer behind it. It pays your supplier directly, up to 60% of the cost of goods, here $216,000, so production starts. Nothing about your existing receivables or inventory had to change for that to happen.
When the goods ship you raise the invoice, and invoice factoring tops the funding up to your advance rate for that retailer. The retailer pays the invoice to Spring, the advances and fees are settled, and the rest is released to you. The next order starts from zero.
Where the 35% comes from
Asset-based money is cheaper than ours, per dollar, per day. We will not pretend otherwise. But the OCC describes asset-based pricing as a structure of loan spreads and fees: charges for field audits, lockboxes and appraisals, and commonly a fee on the line itself and on the part of it you leave unused.2 A facility is priced for a company that will keep it busy.
Take an illustrative $3 million line at 11%, with a 1% annual fee on the facility and a $1 million minimum balance for interest. Those are made-up round numbers of the kind the handbook describes, not any lender's quote. Run two brands through it.
A brand that uses the line heavily, $2 million drawn on average, pays $220,000 in interest and $30,000 in facility fee. About 12.5% a year, all in. That is excellent money, and for that brand the comparison with Spring is not close.
A brand that uses it lightly, $400,000 drawn on average, pays interest on the $1 million minimum, $110,000, plus the same $30,000. That is $140,000 a year on $400,000 of borrowing: about 35%. Same line, same headline rate.
If your need is lumpy, a big order twice a year, you are paying for a great deal of availability you are not using. Spring charges for the opposite thing: 12% to 36% a year, on the amount drawn, for the days it is out, deal by deal. No facility fee, no minimum use, no term and no exit fee. Whether that is more expensive per year depends entirely on how many dollar-days you need.
Side by side
- What it is sized on
- Asset-based lineInvoices and inventory already on your books
- SpringA specific invoice, purchase order or retailer demand plan
- A new purchase order
- Asset-based lineAdds nothing until the goods exist
- SpringIs the thing being funded
- Time to first dollar
- Asset-based lineAbout a month, after diligence and legal
- SpringDays, once your retailer acknowledges a notice
- Commitment
- Asset-based lineA facility, typically multi-year, sized $1M to $15M
- SpringDeal by deal. No minimum use, no term
- Price
- Asset-based lineLower per dollar drawn, plus fees on the facility
- Spring12% to 36% a year, only on what you draw, for the days you have it
- Reporting
- Asset-based lineBorrowing base certificates, field exams, appraisals
- SpringThe invoice or order being funded
- Security
- Asset-based lineFirst lien on everything the company owns; collections through a lockbox
- SpringThe receivables we fund, under a notice to that retailer. Demand plan financing is a secured loan
- Best for
- Asset-based lineEstablished brands with large, steady assets and a finance team
- SpringBrands whose orders are growing faster than their balance sheet
Dwight's terms are from its product page.3 How each Spring product works is on its own page: invoice factoring, purchase order financing and demand plan financing.
What Spring asks of you
One thing, and you should know it before you apply: a Notice of Assignment. Invoice factoring, purchase order financing and demand plan financing all require one. It is a letter to your retailer's accounts payable desk re-pointing payment on your vendor account to a collection account Spring holds for you. Your retailer will know you have a financing partner, and your first funding waits until the retailer acknowledges the notice, which takes days and occasionally a couple of weeks. We wrote a whole post on what a NOA is and what it does to your money.
The one Spring product that does not need a notice is Bridge Funding, which is built for businesses without retailer invoices to fund against.
When Dwight is the better choice
- You will keep the line busy. Steady receivables and inventory in the millions, drawn most of the year. The rate advantage is real and it compounds.
- Your capital need is inventory you already hold. A direct-to-consumer brand with $2 million of finished goods and no retailer purchase orders has nothing for Spring to fund against. Inventory is precisely what an asset-based lender is good at.
- You have the finance function for it. Monthly certificates, exams and appraisals are routine for a company with a controller. They are a tax on a founder doing the books at night.
- You want one committed facility. A line with a known limit is worth something when you are planning, and when you are talking to investors. Dwight's version is also friendlier than a bank's: no personal guarantees, light covenants, and it will lend to a brand that is not yet profitable.3
Can you have both? Sometimes. An asset-based lender's lien covers all receivables and all inventory, so another funder cannot simply finance an order alongside it. It takes an agreement in which the lender carves out the specific orders and receivables being funded. Ask before you sign the facility, not after.
Six questions to ask before you sign either
- What will I actually be able to draw? After ineligible invoices, concentration limits and reserves, on my real receivables ageing, not the headline advance rate.
- What do I pay in a month when I borrow nothing?
- What does it cost to leave?
- What is pledged, who controls my collections, and who gets told?
- How long until the first dollar?
- When my biggest order arrives, does my availability go up that day?
Ask them of us too. If the thing you need to fund is a purchase order or a stack of retailer invoices, get started or talk to the team.
1 Dwight Funding, Comparing revenue-based financing and asset-based lending, read September 2026.
2 Office of the Comptroller of the Currency, Comptroller's Handbook: Asset-Based Lending, on advance rates, ineligible receivables, borrowing base certificates, field audits, lockboxes and fee structures.
3 Dwight Funding, Product, read September 2026.