Asset-based lending

A form of asset-based finance that uses assets on your balance sheet as security against lending.

What is asset-based lending? +

Asset-based lending is a form of asset-based finance that uses assets on your balance sheet as security against lending.

This includes physical assets such as:

  • debtors
  • stock
  • equipment
  • machinery
  • property

It can also include intangible assets such as intellectual property (IP).

What are the benefits? +

Flexible

There are few restrictions on how you can spend the facility.

Quick

If you meet the eligibility criteria, it can take as little as four weeks to receive the money.

Retain control

You can borrow and keep hold of equity.

Options

You can use other forms of finance alongside asset-based lending.

Stable

Your terms for repaying the money you've borrowed can be fixed, allowing for better, clearer planning.

Cashflow

Improve the money you have coming in by leveraging the value of untapped (unencumbered) assets.

What are the risks? +

Your credit report

Lenders will conduct credit checks and due diligence to determine your eligibility. A hard credit check will show on your credit report and may affect your credit rating.

Charges

If you default on payments or attempt to pay off the loan early, you may face with charges. Late payments may also affect your credit report.

Potential to lose assets

If you fail to make your repayments, the lender may seize the asset you've put up as security and sell it.

Am I eligible? +

Are you an established business with assets and a trading history?

Without assets or a trading history, lenders will not be able to lend your business money.

Do you have assets of value on your balance sheet?

Their value could reflect the amount of finance you’re eligible for.

Do you have detailed and accurate financial statements covering your trading history?

Asset-based lenders base their decision on:

  • your financial performance
  • your trading history
  • the value and type of assets you hold

In your financial statements, this information must be set out clearly and show your ability to repay the facility.

Do you have commonly sold inventory?

If you’re using stock or inventory as security for lending, you need to show that you've sold it. This shows you have money coming in regularly to pay off your facility.

How much are you looking for?

Asset-based lenders will consider how much finance you're seeking. Typically, they provide facilities of £5m or more. However, some providers will also offer facilities worth £1m and above.

What do I need to consider? +

Here are some important questions you'll need to consider before proceeding with borrowing from an asset-based lender:

  • How long is the borrowing period?
  • What is the interest rate on the facility?
  • What is the advance rate against the various assets?
  • How much will I pay for the finance facility in the long run?
  • Are there charges for early repayment?

How do I get it? +

There are specialist asset-based lenders in the UK, as well as lenders – including high-street banks – who offer asset-based lending products. You can find these by searching online.

To find out if asset-based lending is right for you, use our finance finder tool

For a clearer idea of what you need to do to prepare your business for asset-based lending, use our checklist

Other finance options

Venture Capital
Equity
Venture Capital invests in businesses with high growth potential, often after Angel investors have got the business started.
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Overdraft
Debt
Businesses can borrow money on demand up to the limit of their overdraft. Overdrafts can be expensive, but a business will only pay interest on the amount they actually borrow.
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Direct Lending Fund
Debt
A business borrows money from a fund and repays it with interest. A fund may be able to provide loans where a bank will not.
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Regional support

Enter your postcode to find business support and case studies from businesses within your region. You'll be taken to our interactive map.