Asset Based Lending

What is Asset Based Lending (ABL)?

ABL provides borrowers with loans secured against balance sheet assets.

The ‘availability’ of debt for the borrower is calculated utilising assets such as account receivables (“AR”), inventory, plant and machinery and real property. Some ABL facilities may include intellectual property, such as brands and patents, when calculating availability.

In addition to the core ABL facility there are also certain lenders who are able to provide additional cash flow lending (extending beyond the asset base), as a one stop shop.

Facilities structured against the current assets (the account receivables and the inventory) will tend to be fully revolving, with term loan facilities provided against fixed assets such as plant and machinery and real property.

Borrowers will report to the lender on the assets offered as collateral with a borrowing base certificate submitted to refresh availability of debt on a periodic basis.

Benefits of ABL

  • ABL provides liquidity to borrowers, accelerating cash flows against account receivables in advance of the usual payment terms, and monetising owned inventory prior to sale
  • The financing is flexible and also suitable for cyclical and seasonal businesses
  • Rapidly growing companies benefit from real time financing for their working capital
  • Borrowers benefit from fewer and less restrictive financial covenants when compared with traditional cashflow based term loans or revolving credit facilities
  • Borrowers benefit from more flexible terms and repayment schedules

Use of ABL

The number of ABL providers and options available to borrowers has continued to increase with new entrants to the market providing specialised and bespoke solutions to the benefit of borrowers. With funding capacity inherently linked to asset values the funding solution is suitable to both growing businesses as well as those with variable cash flows and liquidity concerns.

Example situations whereby ABL can be accessed include the following:

  • Supporting working capital requirements
  • Financing capital expenditure and acquisitions
  • Providing debt to help finance a management buyout or other shareholder transaction
  • Restructuring and turnarounds
  • To fund a dividend payment to shareholders

Our Debt & Capital Advisory team operates throughout the UK and is well placed to use our experience (having raised more than £1bn of ABL financing in the last three years) to tailor debt structures and match these with the funding partners who have the capability and appetite to support you.

Our coverage spans high street banks, challenger banks, ABL specific lenders and private debt funds, all with different structuring and pricing expectations. Navigating this market can be complex but a well structured ABL, provided by the right financial institution, provides a flexible and cost-effective means of unlocking liquidity.

For more information, please use the contact details below contact any of the following members of our team. We would be happy to discuss your situation and the options available in relation to ABL for your business.

Contact us

Richard Siddall

Richard Siddall

Partner, Head of Debt & Capital Advisory, PwC United Kingdom

Tel: +44 (0)7595 610101

Chris Hawes

Chris Hawes

Managing Director, PwC United Kingdom

Tel: +44 (0)7803 085427

Dominic Renshaw

Dominic Renshaw

Director, Debt & Capital Advisor, PwC United Kingdom

Tel: +44 (0)7711 562321

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