Asset-Based Lending

Asset-Based lenders typically use a company’s physical assets as security for lending. Assets like debtors, stock, equipment, machinery and property can all be used as security for Asset-Based Lending.

The number of UK businesses using Asset-Based Lending increased by almost a third over 12 months

UK Finance Quarterly Statistics

Key requirement

You must have assets of value on your balance sheet

Key benefit

Use the value in assets not normally considered by banks and traditional lenders

Key consideration

You may not be able to use an asset that is being used as security for another form of finance.

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 like debtors, stock, equipment, machinery and property, and can also include intangible assets such as Intellectual Property (IP).

"Cashflow is the lifeblood of any business, and Asset-Based lending is one type of finance facility that can help firms take advantage of growth opportunities without damaging their working capital."

Richard Evans Lloyds Commercial Banking

What are the benefits of Asset-Based Lending?

Asset-Based Lending is growing in popularity in the UK. It allows businesses to unlock the value tied up in assets like debtors, stock and equipment, and provides funds quickly.

Benefits of Asset-Based Lending


few restrictions on how you can spend the facility.


could take as little as four weeks if you meet the criteria.


use the value in assets that aren’t normally considered by traditional lenders.


keep hold of equity.


use other forms of finance alongside Asset-Based Lending.


agreement lengths and repayments can be fixed.


improve cashflow by leveraging the value of untapped (unencumbered) assets.

Risks of Asset-Based Lending

Your credit report

Asset-Based 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 be faced with charges. Late payments may also affect your credit report.

The asset seized

Asset-Based Lenders may seize the asset and sell the collateral in the event of default.

Am I eligible for Asset-Based Lending?

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

    Without assets or a trading history, Asset-Based lenders will not provide a facility.

  1. Do you have assets of value on your balance sheet?

    The value of your assets could reflect the amount of finance you’re eligible for.

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

    Asset-Based lenders base their decision on your financial performance, trading history and the value and type of assets held. This information must be clear and show your ability to repay the facility.

  1. Do you have commonly sold inventory?

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

The amount of finance you are looking for will also be considered by Asset-Based lenders. Typically, Asset-Based lenders provide facilities around the £5m plus mark however some providers will also offer facilities worth £1m plus.

“As a first port of call, companies should consult with a trusted adviser to see how Asset-Based Lending can meet their funding needs.”

Richard Evans Lloyds Commercial Banking

Need to know / Checklist

  • 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 you pay for the finance facility in the long run?
  • Are there charges for early repayment?

Is Asset-Based Lending right for you?

About your business

Business stageEstablished with assets and a trading history
Size of facilityVariable – dependent on asset values

Where you can get Asset-Based Lending

There are specialist Asset-Based lenders in the UK, as well as lenders who offer an Asset Based Lending product, including high street banks.

What’s your next step?


Unencumbered – Free of debt or other financial liability. Essentially, if an asset is unencumbered, it is not being used as security against lending.

Other finance options

Expansion Capital
Expansion Capital firms give established businesses money to grow and reach maturity.
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Angel Investment
Angel Investors act as mentors and invest their own money in early-stage businesses for a share in the company.
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Invoice finance
Businesses sell or borrow against their unpaid invoices, giving them access to the money before the invoices are paid.
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