In factoring, a business sells its accounts receivables at a discount. Factoring is not a loan, it is the purchase of an asset. Asset-based lending is an actual loan that the borrower can use on a daily basis. The borrower is still collecting on the invoices, but the cash goes directly to the ABL group and is then applied to pay down their line. Depending on the terms of an asset-based loan, a borrower would not have to tell their debtors that their invoices are owned by the ABL group. In factoring, the debtor would directly pay the factor (financial institution) for the full value of the asset.