Asset-based lending (ABL) – What you need to know
Asset Based lending (ABL), generates finance against a company’s existing assets including stock, debtors, plant, machinery and property. The arranging of this can be in conjunction with debtor finance – factoring or invoice discounting. It is most suitable for businesses that supply goods and services on credit, business to business.
Asset Based Lending was once considered lending of last resort. But as times change, this previous reputation of it is largely misleading. People also think ABL is more expensive than a traditional overdraft but this is by no means always true. High street banks are reluctant to lend and when they do at much higher interest rates. So ABL has suddenly become a real alternative option for providing finance. Costs vary enormously, but generally the stronger the business, the more negotiating power you will have.
So what is ABL and what kind of businesses does it suit?
ABL is a form of commercial finance and particularly good for start-up businesses, because as sales rise, the availability of finance rises with it. It is ideal for quickly-expanding, profitable businesses where they are struggling to finance new orders until they receive payment for items previously sold and invoiced. Sales-linked finance facilities, such as invoice discounting and factoring, have been proven to help businesses grow far faster than with a more restrictive, traditional overdraft facility.
But the reverse is also true, and many established and stable businesses are seeing their ABL facilities diminish due to falling sales.
Lenders generally like a spread of good quality debtors, so businesses with just a single or a few customers may struggle to get a facility. If debtors are well spread, quality becomes less of an issue.
Some of the partners we work with...
From a funders perspective, I find that the team at WF Financial Solutions, really take the time to understand the customers’ needs and wants and with their vast experience are able to match them with the correct funders. This really helps the funders to build a fast and trustworthy relationship to ensure any facilities are provided in a timely manner.
- Wayne Spratt, Business Development Manager, Bibby Factors Yorkshire
Why choose us?
WF Financial Solutions is an independent broker of invoice, asset and trade financing solutions with links to lenders of all sizes and specialties. WF Financial Solutions has helped many clients through a range of lenders and their varying services and we are proud to offer advisory and introductory services to finance providers that suit your needs.
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We specialise in sourcing the best factoring facilities for start-up’s, SME’s and big businesses.
One man band to large corporation, we work hard to ensure you get the deal that works for you.
Trading internationally, buying an asset or looking to refinance, we’ll help you get the best deal.
Sector Specific Funding
Different sectors have different needs and we pride ourselves on working hard to understand your situation.
We work closely with banks to secure the right banking facility or commercial mortgage for your business.