These are challenging times for businesses in Scotland. The effects of high inflation, supply chain disruption, and increasing energy prices are all leading SMEs to turn to more flexible forms of finance.
Lenders can play their part and offer tailored solutions to support SMEs trying to thrive in difficult conditions. In response to this, Shawbrook has enhanced its asset-based lending offering*, simplifying the onboarding process to give businesses another option during complex times.
What is asset-based lending?
Asset-based lending (ABL) is a form of business financing that enables a business to secure a loan by offering its assets as collateral. Assets often include inventory, machinery and equipment, as well as real estate or debt owed to the business. By leveraging the value of these assets, businesses can access capital to manage cash flow, fund expansion, or seize growth opportunities.
Historically, securing an ABL facility was complex and time-consuming, with businesses needing documentation for each asset class they leverage. This made ABL a complicated financing solution, typically used as a last resort or where businesses have poor credit histories.
ABL for the modern-day
At Shawbrook, we feel that ABL can be versatile and enable businesses to unlock substantial value tied up in both paper and physical assets, providing the financial headroom to support pivotal events such as acquisitions, management buy-outs, and other grown plans.
Recognising this, we streamlined our ABL offering so businesses could leverage multiple asset classes within one straightforward piece of documentation. We removed the cap on the collateral mix that businesses employ for funding leverage, with every deal judged on a case-by-case basis. These changes greatly improve the speed of the onboarding process and make the facility significantly easier to manage over its lifetime.
This enhanced ABL proposition can also be integrated with other financing facilities to deliver a bespoke hybrid lending experience. This enables clients to gain access to a highly versatile product and adapt to changing circumstances in real time.
Discover our Asset Finance Broker services.
How an ABL loan transformed Genius Food Limited’s facilities
Utilising Shawbrook’s enhanced ABL solution, an Edinburgh-based food manufacturer quickly secured funds against its business assets to support further growth.
A specialist in manufacturing gluten-free goods which are distributed worldwide, Genius Foods approached Shawbrook to refinance an existing invoice finance line and raise funds to improve production lines at its Bathgate facility. Previously, securing funding on these terms would be painfully time-consuming and complex, resulting in heaps of paperwork.
Using the firm’s invoices as collateral, Shawbrook rapidly assembled a £7.5m asset-based lending package for Genius, incorporating a financing line, a property loan and a cashflow loan, on a 25-year amortised repayment profile.
The terms agreed demonstrate the flexibility and value of ABL in preserving cashflow whilst meeting a multitude of different needs for a client.
The package enabled Genius to leverage its assets to generate the cash needed to continue providing high-quality goods to market and refinance its original invoice finance line, all within one facility that delivers efficiency and is easy to manage.
By Leena Sidat
Source: Insider
