A receivables line, an equipment loan or a lease: which fits a manufacturer or fleet owner?
Quick answer, Nov 11, 2026As of 11 November 2026, match the loan to what the money buys. A receivables and inventory line funds the gap between shipping and getting paid, sized to a borrowing base. An equipment loan buys a machine or truck the lender holds a lien on. A lease, including a TRAC lease for trucks, leaves ownership with the lessor.
A manufacturer shipping on 30-day terms and a fleet owner adding trucks both need to borrow, and banks write a different product for each. The Office of the Comptroller of the Currency, which examines national banks, describes all three in its Comptroller's Handbook, and what the money is for usually makes the choice.
Three ways to borrow against what the company owns
| What you are deciding | Receivables and inventory line | Equipment loan or finance agreement | Equipment lease, including TRAC |
|---|---|---|---|
| What it funds | "short-term working assets, most notably inventory and accounts receivable" (OCC, Asset-Based Lending, "Revolving Line of Credit") | "capital expenditures with the financed assets securing the loans" (Asset-Based Lending, "Term Loan") | "the acquisition of fixed assets" (OCC, Lease Financing, "Background") |
| How much it lends | "Common advance rates range from 70 percent to 85 percent of eligible accounts receivable" (Asset-Based Lending, "Advance Rates and Ineligible Receivables"); "up to 65 percent of the book value of eligible inventory, or 80 percent of the NOLV" ("Inventory") | "the bank typically finances 100 percent of the leased property's value at the inception of the term" (Lease Financing, "Equipment Finance Agreement") | "up to 100 percent financing on the right to use or control an identified asset" (Lease Financing, "Background") |
| Who owns the asset | you; the lender holds "a perfected first-priority security interest" (Asset-Based Lending, "Advance Rates and Ineligible Receivables") | "the borrower in an EFA is considered the owner of the equipment" (Lease Financing, "Equipment Finance Agreement") | the lessor "owns the property" (Lease Financing, "Background") |
| What it asks of you | "borrowing base certificates and supporting documentation on a weekly or monthly basis" (Asset-Based Lending, "Financial Reporting Requirements"), and field audits "often quarterly" at a cost "generally passed on to the borrower" ("Field Audits") | a lien on the equipment; on titled trucks it goes on the certificate of title (UCC § 9-311(a)(2) and (b)) | on a TRAC lease, "a residual value guaranteed by the lessee at the end of the lease" (Lease Financing, "Terminal Rental Adjustment Clause Lease") |
Every quotation was read on 11 November 2026 from the page it links to: Asset-Based Lending, version 1.1 (January 2017), and Lease Financing, version 2.0 (September 2023). The first "provides guidance for bank examiners and bankers" (Asset-Based Lending, "Introduction"), so read the figures as the regulator's account of common bank practice, not as any one lender's terms.
What a receivables lender will not count
The line is sized to eligible collateral, and the booklet lists what is "commonly designated as ineligible" (Asset-Based Lending, "Advance Rates and Ineligible Receivables"): accounts past due long enough to doubt collection, balances over concentration limits, affiliate, government and foreign receivables, accounts where you also buy from the customer, and "Unbilled accounts receivable". An account is normally ineligible "when it is past due by three times the terms, e.g., 90 days for 30-day terms" (Asset-Based Lending, "Delinquency Status"). A bank normally treats one customer at 10 percent or more of receivables as a concentration, and "should limit concentrated accounts to no more than 10 percent to 20 percent of the receivables borrowing base" (Asset-Based Lending, "Concentrations").
Illustrative only: a manufacturer with $2.0 million of receivables, $300,000 of it more than 90 days past due and $200,000 not yet billed, has $1.5 million eligible. At an 80 percent advance rate that supports $1.2 million, before any reserves the lender sets.
What changes for a fleet owner
For property covered by a certificate-of-title statute, filing a financing statement "is not necessary or effective to perfect a security interest" (UCC § 9-311(a)), so a lender against your trucks notes its lien on each title; a dealer's inventory held for sale is the exception (§ 9-311(d)). A TRAC lease is "generally used for 'over-the-road' vehicles such as trucks, tractors, and trailers", and you can "select a higher residual amount for lower monthly payments" (Lease Financing, "Terminal Rental Adjustment Clause Lease").
How to choose, in order
- Name what the money buys. The gap between delivery and payment points to the receivables line; a machine or truck you mean to keep points to an equipment loan. A lease can move the risk that equipment "becomes obsolete" to the lessor, depending on its structure (Lease Financing, "Background").
- Weigh earnings against controls. A receivables line serves borrowers with "erratic earnings, or marginal cash flows", and healthy companies avoiding "tripping restrictive financial covenants" (Asset-Based Lending, "Overview"). In exchange it "is often more expensive than other types of commercial lending", and loan agreements typically let the lender "take control of the borrower's cash" if the borrowing base falls below what supports the loan (Asset-Based Lending, "Disadvantages").
- List every lien before you sign. Purchase-money financing on a machine, perfected when you receive it or within 20 days after, ranks ahead of an earlier blanket lien on it (UCC § 9-324(a)), and the bank "should conduct a lien search before the initial funding" (Asset-Based Lending, "Collateral Liens").
Where Frontier Desk fits
In the Cybernetic Age software takes more of the coordination in companies that make or move things, from dispatch to billing, and a clean receivables aging and equipment list is what each of these lenders asks to see. Frontier Desk keeps lenders on one map, each profile built from that lender's own published criteria, so an owner can set the three side by side. Start with a free first look, or see who lends in your sector on markets. Frontier Desk works as an advisor, not a lender.
Questions
Can a services company use a receivables line? Yes: "A service company may also rely on a revolver to fund accounts receivable" (Asset-Based Lending, "Revolving Line of Credit"). Unbilled receivables are commonly ineligible, so prompt invoicing grows the base. What lenders read at a smaller services company is in loan or recap for a 25 to 75 person company.
Will my customers know? It depends on the agreement. Under UCC § 9-406(a) a customer may keep paying you "until, but not after" it is notified that the amount has been assigned. Many lines route payments through a lockbox, "whereby the lender controls the borrower's cash receipts" (Asset-Based Lending, "Revolving Line of Credit").
Can one lender take receivables and another the equipment? It can work if the collateral is kept separate. The booklet's concern is two lenders sharing the same pool: "the best solution is for a lender to ensure that it is the only lender to hold a lien against a firm's accounts receivable or inventory" (Asset-Based Lending, "Collateral Liens"). Whether a given lender accepts the split is UNKNOWN until its term sheet says so.