What is asset based lending?
Asset based lending (ABL) releases cash against a range of assets to boost a business’ cash flow, combining a variety of asset based finance products to bring maximum gain for clients.
For instance, whilst invoice finance releases working capital against the value of your business’ debtors, business property finance solutions, such as sale and leaseback, unlock cash tied up in commercial property.
Similarly, equipment finance frees capital from the business’ plant and machinery, whilst stock finance does so against the value of a business’ inventory, including raw materials, work in progress and finished goods.
This newly released working capital can then be used to sustain your day-to-day activity, allow for expansion, and provide funding for management buy-outs, management buy-ins, mergers and acquisitions.
What are the benefits of asset based lending?
- Asset based lending releases working capital against business assets to boost its cash flow.
- ABL is more flexible than business loans or bank overdrafts as funding is secured against the value of your assets.
- Similar to invoice finance, asset based lending releases cash tied up in your sales ledger but contains additional elements such as stock finance, asset finance, letters of credit, and business property finance.
- Debtor protection can also be secured through asset based lending to protect the business against bad debts.
- ABL reduces the administrative burden of securing separate asset based finance facilities as there is one point of contact.
- Asset based lending can be provided through a syndicated loan, also known as structured finance, where a group of lenders work together to provide funding whilst you retain a sole point of contact.
Is asset based lending suitable for my business?
Asset based lending has become a widely used cash flow solution, with approximately 50,000 companies of varying sizes across the UK now using asset based finance to release cash against the balance sheet.
There are more than 70 asset based lending companies in the UK and Europe offering a variety of asset based finance products, making it important to seek market insight from an independent invoice finance broker before you agree to a facility.
With extensive experience in sourcing asset based lending solutions to meet SMEs’ individual needs, Hilton-Baird Financial Solutions will identify which options and providers best meet your business’ cash flow requirements.
Call us on 0800 9774833 or email firstname.lastname@example.org for more information on asset based lending. Alternatively, get an asset based lending quote.
Related pages to asset based lending: