Asset Based Lending, also known as ABL is a more advanced form of invoice finance, link which in addition to debtors, also considers the wider assets of the business, including stock, property and plant & machinery. Asset Based Lending provides a flexible facility that works in a similar way in Invoice Discounting, but leverages cash locked up in other assets as well as just the debtor book.
Typically, Asset Based Lending is more commonly used by mid-sized and larger companies as the additional monitoring required to make the facility work tends not to be cost effective for smaller businesses.
The Asset Based Lending company takes a Debenture (fixed and floating charge) over the debtor book and assets of the business, meaning that if the business fails, it can step into the businesses shoes and collect the money owed. With this security, it allows the finance company to lend more than would usually be the case with an overdraft as the risk to them is typically lower.
The main advantage of Asset Based Lending is the ability to release cash tied up not only in the debtor book, but also stock holding and also property, plant and machinery, but often without the more onerous debt servicing obligations that come with conventional lending facilities such as a term loan. An Asset Based Lending facility will fluctuate in line with your businesses requirements, i.e. when your stock holding and debtor book reach higher levels, you will typically have a higher availability of borrowing. When compared to the rigidity of a term loan facility, it provides significantly more flexibility.
An Asset Based Lending facility can provide immediate and crucial cashflow for your business. Most ABL facilities are provided on a Confidential basis, meaning that you do not have to disclose to your clients that you are using the facility.
Key Features of asset based lending
Achieves a higher level of funding than Invoice Finance alone
By leveraging your stock and other assets as well as your debtor book, you can achieve a higher facility to fund your business
Bespoke funding solution, tailored for the needs of your business
All businesses and their requirements are unique so ABL facilities are tailored to suit the needs of your business
Improve your business cash flow
By unlocking money owed to your business, as well as those in other business assets such as stock, you will have more cash available to manage your cash flow
A facility that grows with you
As your business grows, an Asset Based Lending facility grows with you, helping to smooth out cash flow hurdles that could otherwise hold your business back
Contact Ignite Business Group today! Whatever your business need or preferred finance solution, we can help advise you and find you the best deal in the market.
