Asset Based Lending is a way of raising corporate finance quickly. By realising the value of the assets in your business they can be working harder for you to support such things as business expansion, takeovers, MBI, MBO’s or other funding.
The finance is generated by raising the funds against secured assets within your business.
Asset Based Lending can typically raise significant additional funds provided in line with factoring or invoice discounting. The following list provides an idea of the kind of financing available:
- Up to 95% on outstanding invoices
- Up to 80% of the market value on plant and machinery
- Up to 30% on raw materials
- Up to 50% on finished products
- Up to 80% on property
- Even more, with additional cashflow finance loans
Factoring involves selling your invoices to a factoring company this way you get cash quickly without having to collect the debt (some value is lost on the invoice) as the factoring company buys the debt from you and collects it for themselves. They make a profit by paying you less cash than the face value of the invoice.
Invoice discounting is an alternative way of drawing money against your invoices. Instead of a factoring company buying the debt from you your business retains control over the administration of the sales ledger. As well as providing finance it offers valuable support services and credit insurance.