Why Your ABL Deal Got Declined — And How to Fix It

Your Deal Didn't Fail. Your Approach Did.

We've seen this play out thousands of times over 40+ years. A perfectly fundable business walks into a lender's office — good assets, reasonable facility size, legitimate capital need — and walks out with a decline. Not because the deal was bad. Because the execution was bad.

At Don Clarke Enterprises, we've been on both sides of this. Donald Clarke started his career at Bankers Trust and Bank of New York before founding ABLC in 1986. He's sat in the credit committee meetings where deals get approved or killed. He's trained over 5,000 lending professionals on how to evaluate deals. And he authored Asset Based Lending Disciplines — the first textbook on ABL.

When we look at why deals fail, it comes down to three things. Every time.

Reason 1: Poor Deal Structure

A deal can have excellent collateral and still die in committee because the structure doesn't work. Structure means the specific terms of the facility — advance rates, reserves, covenants, pricing, and how all the pieces fit together.

Common structural mistakes we see:

Advance rates that don't match the collateral. A borrower proposes 90% on A/R when the receivables have 12% dilution and heavy concentration. Any experienced credit analyst sees this and immediately questions the borrower's understanding of their own collateral — or worse, questions whether they're trying to over-lever.

Ignoring ineligibles. Borrowers present a borrowing base using total A/R and total inventory, without accounting for ineligible receivables (past-due, cross-aged, concentrations, foreign, intercompany) and ineligible inventory (obsolete, slow-moving, consignment, WIP). A lender's first pass will strip 20-40% of what you thought was available.

Covenants that don't fit the business. Proposing tight financial covenants on a seasonal business that will trip them in the off-season. Or proposing no covenants when the lender clearly wants springing fixed charge coverage. Know what the market expects for your deal type.

Pricing out of market. Asking for bank pricing on a non-bank deal. Or conversely, accepting predatory terms from a lender who knows you're desperate. Both destroy deals — the first by eliminating lender interest, the second by making the economics unworkable.

How to fix it:

Structure your deal the way a lender would structure it internally. Build a real borrowing base with proper eligibility criteria. Propose advance rates that reflect current market terms for your collateral quality. Set covenants that make sense for your business model.

This is exactly what we do at DCE. When a lender opens our credit package, it looks like it came from inside their own credit department. That's not an accident — it's the product of four decades of doing this.

Reason 2: Weak Presentation

Credit analysts at ABL shops typically manage 15-25 deals at various stages. When your submission lands on their desk, they have about 15 minutes to decide whether it's worth pursuing. What they see in those 15 minutes determines everything.

What a weak presentation looks like:

Incomplete financials. You send two years of tax returns and a hand-written aging report. The analyst needs three years of financial statements, monthly or quarterly interim financials, and detailed A/R and inventory aging — all tied to the balance sheet. Without it, they can't underwrite. They won't ask you to go get it. They'll just move on to the next deal.

No borrowing base certificate. If you're approaching an ABL lender and you haven't built a preliminary borrowing base, you're telling them you don't understand ABL. This is foundational. Lenders want to see that someone has already done the math on eligibility, advance rates, and availability.

No projections. How is this facility going to perform over the next 12 months? What are peak and trough borrowing levels? How does the borrowing base move with seasonality? Without projections, the lender has to guess — and lenders don't fund guesses.

No narrative. Every deal needs a story. Why does the borrower need capital? What's the use of proceeds? Why now? What's the exit or long-term plan? A deal summary that reads like a laundry list of data points with no context is a deal that doesn't get read.

How to fix it:

Build a complete credit package before you approach a single lender. Financial statements, borrowing base certificate, collateral analysis, projections, and a deal narrative that explains the opportunity. Read our guide on what lenders actually want to see in a credit package.

At DCE, this is our core value proposition. We build packages that are credit-committee ready. When we send a deal to a lender, the analyst doesn't have to chase missing documents or piece together the story. It's all there, structured the way they're used to seeing it.

Reason 3: Wrong Lender Fit

This is the one that kills the most deals — and the one that's hardest to recover from. Once you've burned through the right lenders by sending the wrong deal or sending it through the wrong channel, those lenders are gone for this deal.

What wrong lender fit looks like:

Sending a $2 million deal to a lender with a $10 million minimum. They won't even open the email. Every lender has a sweet spot — minimum and maximum deal sizes where they're competitive and profitable. Outside that range, you're wasting everyone's time.

Sending a turnaround deal to a bank. Banks handle ABL deals, but most bank ABL groups want clean, straightforward credits with stable performance. A company coming out of a restructuring, a bankruptcy exit financing, or a situation with messy collateral issues needs a non-bank ABL shop or a specialty lender. Sending that deal to a bank is a guaranteed decline.

Sending a deal to a lender who just exited your industry. Lender appetite changes constantly. A lender that was aggressively pursuing transportation deals last year may have hit their internal concentration limit and isn't taking new deals in that space. You can't know this from their website. You know it from relationships.

Mass distribution. Some brokers blast deal summaries to 30-40 lenders hoping to get a bite. This approach has two problems. First, lenders can tell when a deal has been shopped — and heavily shopped deals carry a stigma. Second, you've now burned through your best lender options with a poorly targeted approach. When you finally figure out which 3-5 lenders are the right fit, they've already seen the deal and passed.

How to fix it:

Understand the ABL lending landscape. Know which lenders are banks vs. independent ABL shops vs. factors. Know their minimums, their industry preferences, their risk appetite. Then select 3-5 lenders who are a genuine match for your deal's size, collateral type, industry, and risk profile.

This is where DCE's 60+ active lender relationships become the difference between funded and declined. We don't guess. We know which lenders are actively looking for deals like yours, what their current appetite looks like, and who the right contact is at each shop. Targeted placement — not mass distribution.

The Compounding Effect

These three problems don't exist in isolation. A deal with poor structure gets sent with weak presentation to the wrong lenders, and it fails three times over. Each failure makes the next attempt harder because lenders talk to each other, and a deal that's been widely shopped and declined carries a stigma.

The fix is to get it right the first time. Structure the deal properly. Build a complete credit package. Target the right lenders. This is what we've been doing at Don Clarke Enterprises for over 40 years — and it's why our deals close.

The Real Question

If your deal got declined, don't ask "what's wrong with my business?" Ask "what's wrong with how my deal was presented?" In our experience, the answer is almost always in the structure, the presentation, or the targeting — not in the underlying business.

We've taken deals that were declined by multiple lenders and gotten them funded — not by changing the business, but by changing how the deal was structured, packaged, and placed. That's what 40+ years of ABL market experience looks like in practice.