What is Asset Based Lending (ABL)?
ABL can fund your ambition by offering a range of flexible financial services that can be carefully adapted to suit your individual needs. From expansion and refinancing, to acquisitions, MBOs and MBIs, ABL can help to develop a financial solution that can provide you with the working capital you need when you need it most.
- ABL is a flexible form of finance which allows businesses to secure funding against the value locked up in their debtors, stock, plant and machinery and property. By taking this structured approach, businesses can use their assets to raise working capital and improve cashflow.
- ABL is suitable for all businesses whether they have a need to refinance existing working capital, fund periods of aggressive growth, help finance a management buy-out or buy-in, or even to fund an acquisition.
- Compared to other forms of funding, ABL is an attractive facility because it grows as a business grows. Whereas an overdraft is simply a pool of cash, ABL focuses the business on its working capital, forcing it to address issues such as reducing debtor days and maximising stock and credit turn.
- Focusing on debt against receivables means that there is no capital to service and therefore puts more free cash back into the business.
- The main benefit of ABL as opposed to traditional bank funding is its flexibility. It is linked to a firm's working capital assets so it mirrors the company's working capital cycle and is therefore much better placed to cope with, for example seasonality, than a traditional loan.
- With ABL money is freed-up to be used for expansion plans, restructuring, better machinery and equipment, management buyout schemes, acquisition of new companies – or whatever a company may need for its future development.
- A wide variety of assets can be used, whether it's plant, machinery, property, stock or the debtor book. The additional headroom provided can put businesses in a position to take advantage of opportunities, giving a real edge on the competition.
