Asset-based lending (ABL) is experiencing significant growth, with Yahoo Finance reporting an annual increase of 12.8%. This surge means that UK businesses are currently receiving over £20 billion in lending from UK Finance members through invoice finance and asset-based lending combined. Despite this substantial figure, many SMEs remain unaware of how an ABL facility could benefit their business or even what the product entails.
In essence, asset-based lending involves a business borrowing money secured by its balance sheet assets, such as inventory, accounts receivable, equipment, or property. This type of lending enables businesses to obtain funds based on the value of their assets, often providing more flexible borrowing terms compared to traditional loans. By leveraging their assets, businesses can access needed capital more efficiently.
This multifaceted approach offers a streamlined payout experience for SMEs, allowing them to meet all their funding needs from a single, trusted ABL lender. This reduces the potential complications that arise from dealing with multiple funders, each operating under different terms and timescales. For companies looking to finance a merger, acquisition, or management buy-out/buy-in, asset-based lending is particularly advantageous.
Choosing an asset-based loan allows SMEs to unlock cash flow against their assets, providing immediate access to liquidity. This liquidity can then be reinvested into day-to-day operations, staffing, growth costs, and acquisitions. The ‘one-stop-shop’ nature of ABL means business owners need only approach one lender to secure the necessary funding, rather than dealing with multiple lenders. This significantly reduces the time and stress involved in researching and contacting different funders and minimises administrative burdens. Consequently, business owners can focus more on their core operations.
Furthermore, asset-based lending offers a solution-focused approach, with a dedicated team working to tailor the financing to a business’s unique needs. This customised support ensures that businesses receive the most appropriate funding solutions to help them grow and succeed.
Asset-based lending is increasingly becoming a vital financing option for UK businesses, providing them with the flexibility and support needed to thrive in a competitive market.
Time Finance plc (LON:TIME) is an AIM-listed business specialising in the provision or arrangement of funding solutions to UK businesses seeking to access the finance they need to realise their growth plans. Time Finance can fund businesses or arrange funding with their trusted partners through Asset Finance, Invoice Finance, Business Loans, Vehicle Finance or Asset Based Lending.
