Once seen as a last resort for businesses in trouble, asset based lending (ABL) is a source of finance that has grown year on year for the past 10 years. Why is this?
For a start, bank loans have been harder to obtain since the financial crisis as lending criteria have become more stringent. Because ABL concentrates on lending secured against more easily realisable assets such as debtors, plant and some types of stock, funders can be more flexible in terms of the structure of the finance being made available.
Moreover, the increasing popularity of ABL has led to an increase in the number of providers leading to greater competition and keener pricing.
ABL is not right for every business, but where it is right a little time spent talking to a number of potential providers could reap significant cost savings and produce a range of alternative options.