Asset-Based Lending
Structured Facilities Leveraging Balance-Sheet Assets
Asset-based lending (ABL) is typically used in more complex funding situations where multiple balance-sheet assets are leveraged to provide a flexible and scalable funding solution.
Oakmead Finance advises on the use of ABL within a broader funding structure, so facilities are appropriate to the transaction, operationally workable and resilient post-completion.
How Asset-Based Lending Is Used
ABL facilities are commonly deployed to:
- Support acquisitions involving larger or more complex capital structures
- Provide enhanced liquidity where multiple asset classes are available
- Replace or restructure existing funding arrangements
- Support growth strategies requiring flexible working capital
ABL is particularly relevant for businesses with a combination of receivables, inventory
and fixed assets.
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Typical Structure
While each facility is structured to reflect the specific characteristics of the business, asset-based lending arrangements commonly involve:
- Facilities secured across multiple asset classes, including receivables, inventory and plant
- Revolving and term elements within a single structure
- Borrowing bases linked to asset values and reporting cycles
- More detailed reporting and monitoring requirements than traditional lending
Our role is to advise on structure, lender selection and borrowing base mechanics, so facilities work with the operational realities of the business.
Advisory Considerations
When advising on asset-based lending, we focus on:
Suitability of asset classes and valuation methodology
Operational impact of reporting and audit requirements
Interaction with cashflow lending and other facilities
Covenant structure, headroom and downside protection
Relationship to Other Funding Solutions
Asset-based lending is often structured alongside:
- Cashflow lending to optimise leverage and flexibility
- Invoice finance as part of a broader receivables strategy
- Asset and equipment finance to fund capital expenditure
We advise on how ABL fits within the overall funding structure rather than viewing it in isolation.
Initial Discussion
If you would like to discuss the suitability of asset-based lending within a wider funding structure, Oakmead Finance is happy to arrange a confidential, no obligation discussion.
Contact an Adviser