#Sononym for lending serial number#
An asset finance lender might want the serial number of a forklift in your warehouse, while an ABL lender might only need to look at it on your balance sheet. It also means that with ABL, lenders are often less interested in specific assets, and it’s more about the overall picture of your business. Related: Asset-based lending brings flexibility to dealmakers Because asset-based lending uses a wider base of assets, many businesses find they can raise more cash than with straightforward asset finance. Asset finance is concerned with ‘hard assets’, things like property and machinery, whereas ABL lenders consider various other assets such as accounts receivable (i.e. The most common scenario is a structured combination of invoice finance and a business loan, which provides a lump sum for growth as well as more regular cash flow funding.Īnother key difference of asset-based lending is that the type of assets considered is wider. With asset-based lending, the amount you can borrow is based on your whole balance sheet, rather than specific individual assets, which means it’s suitable for larger companies that want to raise significant capital for growth. Also known as ABL for short, it’s a specific type of lending rather than a general category like asset finance. Asset-based lendingĪlthough the terms sound similar, asset-based lending is a bit different to asset finance. There is another side to asset finance worth mentioning, which is focused on getting new assets - usually via an equipment leasing or hire purchase agreement - but these products are less relevant to our purposes here. In a nutshell, it generally needs to be something that holds value well, and the lender wants to know that you’ll do everything you can not to lose it. Items that depreciate a lot like vehicles are more difficult to use as security, and lenders will usually want the assets to be central to your business activities. It’s important to note that not all assets are considered for asset finance. That means that asset finance is often cheaper than ‘unsecured’ funding, because the lender has the reassurance that the loan is backed up by something tangible and therefore takes on a lower risk. The asset is called ‘security’ because the lender has the right to sell the item in the event that your business can’t repay the loan. 50 per cent to 75 per cent of the resale value). Let’s say your business owned a CNC milling machine worth £10,000 - with this kind of asset to use as security, lenders may be willing to lend between £5,000 and £7,500 (i.e.
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The classic example of asset finance would be getting a loan based on the value of commercial property, machinery, or vehicles. You may also hear it called ‘asset-backed’ or ‘secured’ lending - what they all have in common is a focus on the valuable items your business owns.
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Often, ‘asset-based lending’ is used as a synonym for asset finance, which is a broad category of funding focused on assets. Let’s take a closer look at asset-based lending and asset finance, and unpick some of the terminology that lenders use.