Articles
ABL - Drawing on the strength of your assets
By MARK HARRISON, REGIONAL MANAGER, LLOYDS TSB COMMERCIAL FINANCE
Businesses of all sizes often need rapid access to capital in order to fund their growth aspirations.
Whist many still rely on traditional bank overdraft facilities, a growing number of businesses are turning to asset backed lending (ABL) to boost working capital in times of significant expansion.
ABL is a type of finance that quickly releases the value tied up in outstanding invoices, stock, plant, machinery and property.
Over the past decade it's established itself as an important form of funding for ambitious businesses looking to capitalise on the opportunities in front of them.
Figures from the FDA - the industry body for ABL - state that the sector is now worth more than £148 billion.
ABL products have historically focused on invoice finance, a type of funding which allows companies to raise cash against unpaid invoices on their sales ledger.
It's proven itself to be an ideal means of funding the extra stock required during seasonal peaks in sales, or when a sizable contract is secured.
Increasingly though, Lloyds TSB Commercial Finance is creating ABL facilities that lend against the full range of assets held by a business.
These are tailored to match the specific requirements of each company. This creates a fluidity of funds that means that as a business grows, the facilities can adapt to its changing needs.
The suitability of ABL as a funding solution is not governed by sector or turnover, instead it's closely matched to a company's growth cycle and strategy.
During 2006 we advanced over £1.7 billion to fund a range of events from product diversification to share buy backs, major new contracts to acquisitions.
Management teams who are looking to buy a scalable business in order to accelerate growth and unlock its potential are increasingly turning to ABL to fund their deals.
It can optimise cash flow on a significant scale and facilities can be structured to provide the headroom needed to react quickly to any threats or opportunities that arise post-deal.
ABL has the potential to revolutionise a business' fortunes and for many it's the cornerstone of how they operate.
Lloyds TSB Commercial Finance already supports 14,000 UK businesses and commands a 19 per cent share of the UK invoice finance market by client number. (FDA stats)
As more and more companies understand exactly what ABL can achieve, its popularity is certain to grow even more.
