Asset Based Lending – You May Already Own Your Funding Solutions

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You start with a blank page to decide the route down which your business can move to secure the funding that you need – but commonly people do not consider that the page isn’t blank at their starting point, and that is because of the assets that they already own within their business.

What is Asset Based Lending?

You could define the purpose of Asset Based Lending as leveraging the assets that you already own to enable, grow and advance your business.

Asset Based Lending (ABL) is exactly what is says on the tin – lending that is based on the assets of a business. This includes:

  •       Property and Land
  •       Stock
  •       Assets (such as machinery or vehicles)
  •       Sales Ledger (Debtors Book)

By using ABL to raise all or some of your required capital, the result is a bespoke finance solution based on your business and not a ‘one size fits all’ off the shelf solution.

ABL leverages existing assets that may not already be getting used to generate capital – so they are potentially more efficient and cost effective than seeking unrelated and unsecured finance separately.

Asset Based Lending can play a critical role in both company acquisitions (MBIs) where the assets of your existing business and the business that you are buying can be leveraged, as well as MBOs where the existing management team can leverage the assets that they already work with to part or fully fund their deal.

Property and Land

A company can own a variety of different property types or land, with or without planning permission. Where the business has headroom in the equity of this property or land, they can release capital with a secured loan.

For example:

A manufacturing business has a property worth £1m on its balance sheet, with an outstanding commercial owner-occupier mortgage of £300k.

Subject to credit assessment of the current trading performance of the business, they may be able to look to raise up to an additional 40% of the property value, or £400k, through refinancing the property.

This type of secured finance will be at a lower rate than unsecured finance that would be available, and a good example of Asset Based Lending being more cost effective than a new or separate unsecured loan facility.


A type of funding that will commonly be looked at alongside another facility, such as Invoice Finance, but where viable and relevant it can again help to release some capital in stock that is currently just ‘sitting there’ where the business commonly holds it.

Typically Stock Funding will release 15% – 20% of the value of stock levels, where the business demonstrates that it holds a fairly consistent level taking both sales and supply into account.

Assets (such as machinery or vehicles)

In simple terms, your company may own assets that are either unencumbered or partially financed. Lenders will commonly lend up to 70% of their current value less any outstanding finance.

On its own unlikely to be funding the complete finance requirement that you have, but like Stock Funding you could get a valuable contribution from Asset Refinance.

Sales Ledger (Debtors Book)

You can help to release working capital towards your funding requirements by leveraging the outstanding customer invoices of your business (your debtors’ book).

The debtors’ book is an asset of a business, and when unencumbered it has the potential to release vital capital towards the funding that you are looking to achieve.

This funding is then repaid through the natural flow of turnover through the business, and not via fixed loan payments every month, taken no matter what turnover the business is doing. This could add a lot of value in the context of an ABL package of different types of funding combined.

Packaging an Asset Based Lending solution

The beauty of using ABL funding is that is like a corporate tool box – or a funding “pick ‘n mix” almost. You literally just pick up and use the elements that are suitable and add value to your overall funding requirements.

To that end the funding does not have to be sourced all from one lender – and the ability to piece it together from more than one funding source can help you to achieve improved terms and rates – and ultimately the most suitable outcome to fund your acquisition.

We have experience of using both single and multiple lenders to provide funding options for clients, and combining Asset Based Lending where necessary with further funding facilities such as Term Loans and Trade Finance to complete the required commercial finance package.


We work with clients to understand the funding requirements and their underlying business, doing all the legwork to source suitable solutions and to help them achieve the best outcome for their requirements.

How do you want to finance your business?

Mark Grant, September 2021.  / 01636 614 014