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ABL for manufacturers

Asset based lending for manufacturers

Manufacturers carry cash in every part of the balance sheet: invoices, raw materials, finished goods, the machines that make them and the factory itself. We arrange asset based lending that borrows against all of it in one revolving credit facility, from £2m to £100m, for engineering, food and drink, automotive, electronics and process manufacturers.

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No credit search and no upfront fee.

facility sizes
£2m to £100mfacility sizes
in one borrowing base
4 asset classesin one borrowing base
over Bank Rate on the receivables line
From 2%over Bank Rate on the receivables line
upfront fee
£0upfront fee
What can be funded

Every asset on a manufacturer's balance sheet can work harder

One revolving credit facility, one borrowing base. Lenders apply an advance rate to each eligible asset class, and the more of your balance sheet the facility covers, the more working capital it releases.

Trade receivables

Up to 90% of eligible debtors, available as soon as goods are delivered and invoiced, and redrawn as customers pay.

Raw materials and finished goods

Up to 90% of net orderly liquidation value, set by an independent appraisal. Raw materials and finished goods usually qualify; work in progress rarely does.

Plant and machinery

Up to 85% of net orderly liquidation value, as a term loan inside the facility amortising over 3 to 5 years. Presses, CNC machines, lines and fork-lift fleets, valued independently.

Your factory or premises

Owner-occupied property up to 80% of market value, as a term loan inside the facility.

What it is for

Built around how manufacturers actually need cash

Manufacturers pay for materials and labour weeks or months before a customer pays an invoice. A bank overdraft set on last year's accounts rarely keeps up with a growing order book. An ABL facility moves with your debtors and stock on 3 to 5 year committed terms, so a big order releases more funding rather than straining cash flow.

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  • Fund raw materials for large or seasonal orders
  • Bridge long customer payment terms (60 to 120 days)
  • Replace or refinance an overdraft that no longer fits
  • Release cash from plant and property you already own
  • Fund an acquisition, MBO or MBI
  • Support a turnaround or recovery from a loss-making year
Worked example

How a facility might look

Trade debtors: eligible £2.4m at 90%
£2.16m
Raw materials and finished goods: NOLV £800k at 90%
£0.72m
Plant and machinery term loan: NOLV £900k at 85%
£0.765m
Freehold factory term loan: market value £1.5m at 80%
£1.2m
£4.845m ABL facility: a £2.88m revolving line and £1.965m of term loans inside it

Illustrative example of an engineering business turning over £14m. Actual advance rates and pricing depend on debtor quality, stock type, independent valuations and the lender's credit assessment.

Try your own figures

Use the calculator below with numbers from your balance sheet for an indicative range.

Go to the calculator
How it works

From first call to facility live

  1. 1Day 1

    Share your numbers

    Latest accounts, an aged debtor report, a stock report, an asset list and property details are enough for us to size a facility.

  2. 22 to 3 days

    Indicative terms

    We go to the banks and specialist ABL lenders with appetite for your type of manufacturing and come back with options.

  3. 32 to 4 weeks

    Field exam and valuations

    The chosen lender audits the debtor book, has the stock appraised and values plant and property. We prepare you for each step.

  4. 43 to 6 weeks

    Facility live

    Funds available against your borrowing base, updated as you invoice and as stock moves.

Calculator

What could your assets raise?

£

Up to 90% advanced, 95% to 100% in some sectors

£

Up to 90% of its liquidation value

£

Up to 85% of its liquidation value

£

Up to 80% of market value

Indicative facility
£3,775,000 to £4,680,000
From your debtor book alone
up to £2,700,000
Get an indicative facility

Illustrative only. Full ABL facilities start from £2m. Lenders apply advance rates to eligible assets after checks on debtor quality, concentration, stock type and independent valuations. It is not an offer of finance.

Why asset based lending suits manufacturers

Manufacturing is capital intensive. Cash is tied up in materials before production starts, in finished goods waiting to ship, in customer invoices on long terms and in plant and property. Traditional lending looks backwards at profit; asset based lending looks at what the business owns today, which for most manufacturers is far more than their overdraft reflects.

ABL is one revolving credit facility with a single borrowing base across up to four asset classes: trade receivables up to 90% of eligible debtors, stock up to 90% of NOLV, plant and machinery up to 85% of NOLV and real estate up to 80% of market value, the last two as term loans inside the facility. Facilities run from £2m to £100m, priced from 2% over Bank Rate on the receivables line, on 3 to 5 year committed terms. Because the facility revolves, it grows with sales: when a large contract lands, the extra debtors and stock increase what you can draw.

How lenders treat stock and work in progress

An independent appraiser sets the stock's net orderly liquidation value, what it would fetch in an orderly sale over a few months, and lenders advance up to 90% of it. Raw materials that other manufacturers could use, and finished goods with a ready market, value best. Work in progress and highly bespoke components are usually excluded or heavily discounted, so we look at your stock profile early to set realistic expectations.

Plant, machinery and property

Machinery is valued by an independent valuer on a net orderly liquidation basis and included at up to 85% of that value, as a term loan within the facility that amortises over 3 to 5 years. Well-maintained, widely used equipment such as CNC machines, presses and fork-lift fleets holds value well. An owner-occupied factory can be included at up to 80% of market value, again as a term loan inside the facility.

What sits alongside the ABL

Asset finance for new machinery, trade finance for imported materials and any standalone commercial mortgage are separate facilities, not part of the ABL. We arrange them alongside it, often with the same lender, and agree the security terms up front.

What lenders look for

  • A spread of creditworthy trade customers, without heavy reliance on one
  • Clean, timely sales ledger and stock records
  • Accurate management accounts, ideally monthly
  • A credible plan for what the facility will fund

Talk it through

Share your latest figures and we will come back with an indicative facility within two to three working days.

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FAQs

Common questions

How much can an ABL facility release?

Up to 90% of eligible debtors, up to 90% of stock NOLV, up to 85% of plant and machinery NOLV and up to 80% of the market value of owned property, in one facility from £2m to £100m, priced from 2% over Bank Rate on the receivables line.

Can work in progress be funded?

Rarely on its own. Most lenders exclude or heavily discount work in progress because it is hard to sell part-made. Raw materials and finished goods are the stock that usually counts.

We have one large customer. Is that a problem?

Lenders apply concentration limits, often 25% to 40% of the debtor book for one customer, depending on that customer's strength. A blue-chip customer can be acceptable at a higher level. We find lenders whose limits fit your customer base.

Can ABL replace our bank overdraft?

Yes, and it often provides much more headroom. The ABL lender refinances the overdraft and any existing invoice finance, then gives you one committed 3 to 5 year facility that moves with your trading.

Can we fund new machinery at the same time?

Yes. New equipment is funded through asset finance, a separate facility alongside the ABL, at up to 100% of the cost over 2 to 7 years. Machinery you already own sits inside the ABL as a term loan at up to 85% of NOLV.

Can ABL fund an acquisition or management buyout?

Yes. We advise on acquisitions, MBOs and MBIs and run the debt process end to end. An ABL on the target's assets is often combined with a cash-flow term loan of up to 5x EBITDA, which keeps the equity needed to a minimum.

How long does it take?

An indicative facility in two to three working days, and funding typically three to six weeks after credit approval, once the field exam and valuations are done.

Put your whole balance sheet to work

Send us your debtor and stock reports and we will size an indicative facility within two to three working days.

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