Asset Backed Lending
The investment required to bring inventory into your business can be a real drain on your working capital and cash flow. However, asset backed lending could unlock some of this value.
Most businesses in non-service sectors buy in inventory, raw materials and stock for straight resale or manufacture.
Manufacturers can fund each part of the process – from raw material purchase through to work in progress and the holding of finished goods. Funding this inventory from cash reserves can therefore tie up working capital for prolonged periods of time and have your capital sitting idle.
Asset backed finance works on a similar principle to invoice finance
Instead of a flexible facility, advancing you payment secured only on your outstanding invoices, asset backed finance looks at the value of your inventory and advances you funds against that value instead. In essence, Asset Backed Lending generates finance against existing assets in your business – enabling you to raise funds secured on assets you already own.
Whilst the amount of the advance is typically lower than the 90% typical of invoice finance, owing to the fact a sale still hasnt been made, it still effectively means that you unlock idle capital that is locked into your inventory and use it to run the business.
Provided in tandem with Factoring or Invoice Discounting, Asset Backed Lending can typically raise significant additional funds to support business expansion, capital investment, takeovers, MBI, MBOs or other funding requirements.
Factoring Finance Ltd will work with you and, through our National Independent Broker Network, find you the best deal on the facility that is right for your business. We can typically raise anything from £50,000 to £10m or more in corporate finance.
Generally, businesses that see the benefits of asset backed lending facilities are:
• Those that sell products or services to other companies (business to business) on credit.
• Hold high levels of stock which tie up their cash.
• Have to buy raw materials and/or pay staff and suppliers more quickly than they in turn get paid from their customers.
If you want to know more about any of the invoice based or asset based finance options available, please feel free to browse the in-depth sections for more info on Invoice Finance such as Factoring and Invoice Discounting or other Commercial Finance options such as Commercial Mortgage.