What is asset-based lending?
A form of asset-based finance that uses assets on your balance sheet as security against 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:
It can also include intangible assets such as intellectual property (IP).
There are few restrictions on how you can spend the facility.
If you meet the eligibility criteria, it can take as little as four weeks to receive the money.
You can borrow and keep hold of equity.
You can use other forms of finance alongside asset-based lending.
Your terms for repaying the money you've borrowed can be fixed, allowing for better, clearer planning.
Improve the money you have coming in by leveraging the value of untapped (unencumbered) assets.
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.
If you default on payments or attempt to pay off the loan early, you may face 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.
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.
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?
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
Corporate Venture Capital
|Purpose of financessss||Acquisition, research and development|
|Amount of finance||£1m+, depending on business|
|Duration of finance||3-5 years|
|Cost of finance||None|
|Time of finance||6-12 months|
|Annual turnover||Depends on the business|
|Purpose of financessss||Acquisition, product development, new markets|
|Amount of finance||Up to £50m on AIM; unlimited on the Main Market|
|Duration of finance||10 years +|
|Cost of finance||You will need to appoint an accountant, a law firm and usually a PR firm. Assume this will cost 8% of the amount you hope to raise|
|Time of finance||IPO processes takes 10-12 weeks; but planning and negotiations can take 12-18 months|
|Business stage||Established and growing|
|Annual turnover||Over £5m; this does not apply to healthcare businesses|
|Sectors||All sectors; healthcare and tech may be able to list earlier in their lifecycle than other sectors|
|Business stage||Any but must have invoices|
Enter your postcode to find business support and case studies from businesses within your region. You'll be taken to our interactive map.