Asset-based lending checklist

Asset-based lending allows businesses to use untapped assets – like machinery, property, receivables (such as invoices) and intellectual property (IP) – as security against lending.

This checklist could help you avoid common mistakes and help you decide whether asset-based lending suits your business before you apply.

PLEASE NOTE - This checklist is not part of an application process for asset-based lending. However, we hope it gives you an idea of what is involved and what you need to do to prepare for asset-based lending. Some providers may ask for more or less information about your business and the finance you need than what is set out below. This will change depending on individuals and the funding involved.

Stage 1: Understanding asset-based lending

Do you understand what it is?

Asset-based lending is a type of asset-based finance, like invoice finance. You can use assets including stock, equipment, property and machinery as security against lending.

Do you have assets of value on your balance sheet?

The value of your assets will have an impact on the size of the loan you receive. Do you know how much your assets are worth?

Are you already using assets as security for another finance facility?

You may not be able to use an asset that you are already using as security for another form of finance.

Are you aware of the benefits and risks?

Asset-based lending is flexible and quick but there are risks involved, particularly if you default on repayments.

Stage 2: Knowing if asset-based lending suitable for you

Are you an established business?

Asset-based lenders usually only offer facilities to established businesses with a trading history. 

Are your finances in order?

Can you prove that you'll be able to repay your loan? Your accounts and financial statements need to reflect this. 

Stage 3: Understanding the asset-based loan

Do you understand the deal?

Do you know which assets you’re going to use for security? Does the borrowing period suit your business’ needs?

Do you know what the loan will cost?

What’s the interest rate the asset-based lender has set out? How much will it cost your business in total? Are there any charges for early repayment?

How will you use the loan?

Do you know how you’ll use the loan? How will your business benefit? Have you forecast how the loan will affect your business?

Stage 4: Preparing your business for asset-based lending

Are your accounts and financial statements presentable?

The asset-based lender will usually look at your accounts and financial statements when assessing your eligibility. They are also likely to conduct due diligence.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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