Securing traditional loans when facing a cash flow shortage can be difficult and slow, which is where asset-based lending in the UK becomes useful. This group of loans, which is a form of secured lending, enables businesses to borrow money against existing company assets such as equipment and accounts receivables. Heavily streamlined processes coupled with less rigorous requirements make asset-based lending intuitive for businesses that require quick access to capital.

This step-by-step guide will help you increase the finances, liquidity and operational momentum of your company by efficiently managing your asset-based lending. Whether you are experiencing a seasonal slump or trying to unlock working capital, this document marks the beginning of your journey.

Step 1: Understand What Asset-Based Lending Is 

Start with the fundamentals. In asset-based lending (ABL), businesses can borrow money against their assets which may include:

• Collections (receivables or invoices)
• Stocks (inventory)
• Machinery or equipment
• Commercial property (real estate)

Compared to unsecured loans that depend largely on credit scores, absent-based lending—or ABL—places greater importance on assets a business controls. This form of lending is appealing to firms holding significant physical assets and receivables but struggling with cash flow or credit.

Based asset lending in the UK is rising in popularity, as it serves as a different option from the traditional bank loans. Compared to bank loans, it has faster approval times, increased flexibility, greater customization, and a better overall business financing strategy, all of which are scarce in traditional lending.

Step 2: Determine the Assets You Can Exploit

Before applying, make sure to evaluate what your business can capitalize on. Based asset lenders generally classify eligible assets into a few categories.

• Accounts Receivable: Uncollected customer invoices are preferred for ABL. Lenders will usually advance up to 90% of the invoice value.
• Inventory: If you have a significant amount of stock on hand, this can be used as collateral, although it is normally at a lower advance rate of approximately (50-70%).
• Equipment and Vehicles: These tangible assets may be evaluated and utilized to back loans.
• Property: Commercial real estate offers superior value collateral, but due to complex valuation issues, they may take longer to process.

What’s the best way to determine which assets qualifies? Then, here comes a trusted partner like Simply Factoring Brokers to pinpoint financeable assets and procure better lending terms.

Step 3: Figure Out How Much Financing You Need

Before contacting a lender, figure out your goals because asset-based lending does not fit all models. So, consider the following questions:

• What is the total amount of funds required?
• What is the capital expected to be used on (ex: payroll, business expansion, purchasing inventory)?
• When is the money needed by?
• Would I prefer a one-off loan or a revolving credit line?

Your asset-based lending structure will depend on what you state here, and thus, your broker will be able to better assist you. For example, revolving lines of credit based on receivables would be better suited to borrowers seeking continuous working capital, as opposed to fixed loans secured against equipment.

A Midlands-based logistics firm is a great illustration: They needed to expand their fleet because demand was through the roof. Rather than applying for a traditional loan, the company used the existing vehicle assets and invoice’s receivables, which enabled them to obtain a revolving credit facility that was approved in less than a week. This is the ease that comes with asset-based lending.

Step 4: Work With An Experienced Broker for Asset-Based Lending

After gaining understanding of your needs and available assets, you now need to shift your focus on the prospective lending partner. Direct contact with lenders can end up being tedious and take a lot of time, especially without prior experience.

Such factors as these is what makes partnering with a expertise broker like Simply Factoring Brokers beneficial.

They offer:

• A vast network of asset based lenders situated in the UK
• Unbiased advice that aligns perfectly with your business needs
• Quicker approvals accompanied with little to no paperwork
• Constant support in adjusting your facility as per business requirements

Simply Factoring Brokers’ team invests time to understand your business – which in turn simplifies the application process and negotiations. Simplifications like these can be lifesaving when it comes to managing long term finances.

Step 5: Manage and Apply for Your Lending Facility

Upon being versed with a lender, you’ll likely have to go through this process:

1. Asset Valuation – Your receivables or inventory items will be valued
2. Yay or Nay and Setup – Legal documentation is drafted after all agreed on the terms
3. Fund Dispersion – Depending on the asset, funding can be released within 24-72 hours
4. Continuous Reporting – Submit periodic updates on asset value (e.g., debtor reports for receivables) and the like

Managing the facility is easy. With your broker’s assistance, you may monitor the usage, strategize your repayments, and modify your facility as business requires.

Pro tip: Ensure that you continually service outstanding assets and repayment terms to retain favourable financing terms. Your borrowing capacity increases proportionately with the growth of your asset base.

Prepared to deploy asset-based lending for your enterprise? 

Asset-based lending in the UK is no longer a safety net for failing firms. It is an intelligent, calculated approach by businesses seeking access to cash without giving up equity, incurring additional debt, or irrationally leveraging the company.

With a little understanding of the process and an experienced broker like Simply Factoring Brokers, you can unlock valuable business assets, transforming them into engines of expansion.

Wonder how to begin? 

To learn more about their asset-based lending solutions, reach out to Simply Factoring Brokers. From alleviating cash flow constraints to supporting major business initiatives, their seasoned professionals will offer comprehensive strategies tailored just for you.