Asset Based Lending can be a valuable source of capital for growth

As we emerge from the Covid-19 pandemic, many businesses are moving through the recovery phase and looking towards growth again.

For some, there may be sufficient revenue coming in and existing finance facilities in place, to support this growth on its own. But for others, it may mean that additional sources of working capital are needed as the business moves into expansion mode.

That’s where Asset Based Lending (ABL) can prove to be a valuable part of the financing mix. ABL offers fast access to working capital tied up in your assets. This can be across a wide spectrum including receivables (invoices), inventory, plant and machinery, property and other assets, providing you with access to a facility that injects cash into the business and creates more cash headroom.

At Aldermore, we’re seeing increased demand for ABL from our business customers. There are a number of factors at play in this. Whilst some government support schemes remain, many have now ended such as the Coronavirus Jobs Retention Scheme (furlough) and the Coronavirus Business Interruption Loan Scheme (CBILS). Repayments of CBILS and other support loans have started for most borrowers (repayments usually beginning 12 months after taking out a loan). HMRC liabilities, such as the VAT deferral from 2020, have fallen due.

Alongside this, businesses are under increased pressure from rising costs. The price of materials, transportation and storage are going up. Energy prices have risen steeply. Staff shortages in the marketplace are creating wage inflation. For many SMEs, it feels like everything is getting more expensive.

The combination of these factors means that many sound businesses are looking to secure extra liquidity, perhaps for the first time. ABL is an alternative to traditional term loan borrowing such as a bank loan or overdraft. It’s flexible, tailored to your needs and scalable to grow in line with business requirements.

Our approach at Aldermore is to provide flexible facilities through the provision of an invoice finance facility and further advances against your assets alongside it.

Another feature that we can build in, is a facility through the Recovery Loan Scheme (RLS) that we are accredited to offer. This creates a cash term loan in addition to the rest of the financing. The RLS has recently been extended for applications until 30 June 2022, with some changes on the scheme coming into force on 1 January 2022, allowing us to continue to support SMEs with additional funding.

We’ve seen powerful growth in demand for ABL and invoice finance – providing £250m of working capital facilities to businesses in the last year. If you’re looking to raise finance to refinance, fund growth or use in an acquisition, don’t forget about the funding potential locked up in your business assets.

 

Subject to status. Security may be required. Any property or asset used as security may be at risk if you do not repay any debt secured on it.