For UK businesses with significant assets on their balance sheet, asset based lending offers a powerful and often underused route to working capital — one that unlocks funding based on what your business owns rather than what it earns. Whether you are a manufacturer with substantial plant and machinery, a distributor carrying significant stock, or a B2B services business with a strong debtor book, an asset based lending facility could give you access to considerably more funding than a traditional bank loan or overdraft — and faster than you might expect.
At Growth Business Finance, we arrange asset based lending facilities for UK SMEs and mid-market businesses — from £250,000 invoice finance lines through to multi-asset ABL structures of up to £120 million. In this guide, we explain exactly how asset based lending works in the UK, which products are available, who qualifies, and how to get started.
What is Asset Based Lending in the UK?
Asset based lending (ABL) is a form of business finance where a revolving credit facility is structured around the value of a company’s assets rather than its cash flow or profitability alone. A lender assesses the eligible assets on your balance sheet — typically trade receivables, inventory, plant and machinery, and commercial property — and applies an advance rate to each asset class to calculate your total borrowing base.
Unlike a traditional term loan with a fixed limit, an ABL facility is dynamic: as your assets grow, so does the amount available to you. This makes it particularly powerful for growing businesses, seasonal businesses, and companies that hold significant physical or receivable assets. The facility revolves — you draw down what you need, repay it, and draw again — giving you flexible, ongoing access to working capital that moves in line with your business.
Asset Based Lending Products: What Can Be Financed?
Asset based lending is not a single product — it is a broad category of finance that covers several different asset classes. UK lenders offer the following products within an ABL structure, either individually or combined into a single multi-asset facility.
Invoice Finance is the most widely used ABL product for UK SMEs. Also known as receivables finance, it allows you to draw up to 95% of the value of outstanding invoices within 24 hours of raising them, rather than waiting 30, 60 or 90 days for customers to pay. Available as confidential invoice discounting (where your customers are unaware of the facility) or as a fully managed factoring service, invoice finance is available from £250,000 upwards and is particularly effective for B2B businesses with strong debtor books. Find out more about invoice finance and asset based lending at Growth Business Finance.
Asset Finance allows businesses to raise funds against the value of their plant, machinery, vehicles and equipment — without selling those assets. Whether through hire purchase, a finance lease or an asset refinance against owned equipment, this product frees up working capital while keeping key operational assets in use. Stock and Inventory Finance turns stock into working capital by allowing retailers, manufacturers and distributors to borrow against the value of their inventory — typically at advance rates of 60-85%. Commercial Real Estate Finance allows property owned by the business to be incorporated into an ABL borrowing base at up to 65-70% LTV, further increasing the overall facility size.
Asset Based Lending vs Traditional Bank Loans: Key Differences
One of the most common questions we receive is how asset based lending differs from a conventional business loan. The distinction matters — particularly for businesses that have found traditional lending insufficient or inaccessible. Here is a direct comparison of the two approaches:
- Basis of lending: Traditional bank loans are based primarily on financial history, profitability and credit profile. ABL facilities are based on the quality and value of your assets — meaning businesses with strong balance sheets but volatile profits can often access significantly larger facilities.
- Facility size: Bank overdrafts and term loans for SMEs are typically capped at a fraction of the business assets. A full ABL facility draws against the combined value of receivables, stock, plant and property — often unlocking two to three times more working capital than a standard bank line.
- Flexibility: Traditional loans have fixed limits and fixed repayment schedules. ABL facilities are revolving and dynamic — the limit automatically increases as your assets grow, and you only pay for what you use.
- Accessibility: Businesses that have experienced rapid growth, recent acquisitions, or cyclical revenues may struggle to satisfy traditional bank lending criteria. ABL lenders are generally more focused on asset quality than historical profit, making ABL more accessible in these situations.
- Speed: Indicative ABL terms can be available within 2-3 business days. Full funding typically completes in 3-6 weeks — comparable to or faster than many bank processes for structured facilities of equivalent size.
Who is Asset Based Lending Right For?
Asset based lending is most effective for UK businesses that hold significant assets on their balance sheet — particularly those whose funding requirements have outgrown their existing bank facilities. It is widely used across manufacturing, wholesale and distribution, logistics and transport, staffing and recruitment, retail and e-commerce, construction, food production and healthcare.
For individual products such as invoice finance and asset finance, most lenders require a minimum annual turnover of around £500,000. For full multi-asset ABL facilities in the £5 million to £120 million range, lenders focus more on the value and quality of the underlying asset base. ABL is also increasingly used to fund management buyouts (MBOs), acquisitions and growth strategies — where a large revolving working capital line backed by the target company’s assets provides an efficient and flexible funding structure. Explore our commercial property finance options if real estate forms part of your asset base.
How Much Can You Borrow? Advance Rates Explained
The amount available under an ABL facility is determined by applying an advance rate to each eligible asset class. Advance rates reflect how liquid and recoverable each asset is in the event of default — receivables attract the highest rates because they are the easiest to realise, while property attracts lower rates due to longer realisation timescales.
Typical UK advance rates are: trade receivables 80-95%; stock and inventory 60-85%; plant and machinery 60-80%; commercial real estate 65-70%. A business with £2 million of outstanding invoices, £500,000 of stock and £1 million of plant and machinery could therefore access a combined borrowing base of over £2.5 million — significantly more than most equivalent bank facilities. Individual products start from £250,000, while full multi-asset facilities range from £5 million to £120 million.
The Asset Based Lending Process: From Enquiry to Funded
Working with an independent broker like Growth Business Finance means we manage the entire ABL process on your behalf — from identifying the right lenders and negotiating terms, through to credit approval and drawdown. Here is how the process typically works.
We begin with an initial conversation to understand your business, your asset base and your funding goals — no lengthy application forms at this stage. Within 2-3 business days, we approach our panel of clearing banks and specialist ABL lenders and come back with indicative facility sizes and headline terms for your review. Once you select a preferred lender, they will carry out credit and due diligence — including a field examination of your assets — which we manage throughout to keep all parties aligned. Full funding typically completes within 3-6 weeks of credit approval, at which point your revolving facility goes live and funds are available to draw as needed.
Get in touch with Growth Business Finance for a free, no-obligation consultation. Call us on 020 3432 2341 or apply online at growthbusinessfinance.com today.