Asset based lending is a form of borrowing that uses assets on a companies balance sheet as security against the lending. Most asset backed providers will look at facilities from £1m+
A brief overview of assets on the balance sheet that can be used are as follows.
Essentially a bank will leverage against the value of the assets on the balance sheet to release cash which could be used for a number of reasons. This can be a great way for a business to build a huge cash injection without having to take outside funding. It can be a great tool to assist companies going through growth phases.
Asset-based lending can be particularly suitable for:
Each deal is individually priced given the risk of the businesses and sector. This means it is impossible to compare one deal with another.
As with most financial products in the lending market, ABL facilities are extremely complex. Banks take advantage of this and will always pitch as high as they can in terms of fees and pricing structures. Having a good adviser on your side through this negotiation can be hugely beneficial and will make sure you are getting the correctly structured facility for your business.