2 min read
Definition
Asset-based lending (ABL) is finance secured on a company's assets, most often its receivables, but extending to stock, plant, equipment and sometimes property. Rather than a fixed sum, it usually works as a revolving line: the amount you can draw is calculated as a percentage of the eligible assets, so the facility grows as the business does.
How it works in practice
ABL suits asset-rich, working-capital-hungry businesses — wholesalers, manufacturers and distributors carrying significant stock and trade debtors. Because the lending is backed by assets, larger lines can be available than an unsecured facility would offer, but the assets are pledged as security and are monitored closely. Invoice finance is the most common single strand of ABL, releasing cash tied up in unpaid invoices. For a smaller company that wants flexible funding without pledging assets or signing a personal guarantee, an unsecured business credit facility is often the simpler route — Credicorp lends to the company and takes no personal guarantee.
Related reading
Receivables
Receivables (or accounts receivable) are the amounts your customers owe your business for goods or services…
Read →
Invoice finance: a complete guide
Invoice finance turns unpaid customer invoices into cash you can use now. This guide explains factoring…
Read →Asset finance
Asset finance lets a business acquire equipment, vehicles or machinery by spreading the cost over time,…
Read →
Revolving credit
Revolving credit is a flexible facility with a set limit that you can draw down, repay and draw again…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.