In the current economic climate, more large businesses are finding that their existing funding facilities may not be the most appropriate for their needs.

This has led to a rise in companies looking to refinance and renegotiate their lending terms when their existing packages expire.

Since some lending conditions are not as suitable as they were two or three years ago, businesses are increasingly considering ABL when it comes to refinancing.

Unlike a cash flow loan, the borrowing capacity for ABL is based on the amount, quality and liquidity of a firm’s accounts receivable, inventory and fixed assets.

This makes it particularly suited to companies that are restructuring or refinancing.

Lloyds TSB Commercial Finance meets these capital requirements for many of the UK and Europe’s leading medium and large-cap companies.

We can work with you to help your clients identify the most suitable refinancing package and recommend that the following companies consider ABL:

• Businesses that are struggling to meet covenants. The ability to reinvest cash back into a business is essential to a company being able to fulfil maturing debt obligations. ABL is an effective way of refinancing existing facilities that have become onerous and quickly advances cash into a business without it having to rely on a traditional bank overdraft or loan.
  
• Businesses that are experiencing cash flow difficulties. Often, working capital issues are caused by late customer payment. This problem may be particularly acute for large firms who are likely to have a broad sales ledger. ABL can help to bridge the gap between raising an invoice and receiving payment, by releasing the value tied up in outstanding invoices.
  
• Businesses that require flexible lending. Since ABL facilities are predominantly revolving credit in nature, they do not require a fixed number of payments. Packages can be carefully adapted to suit an individual firm’s needs and can be scaled up or down depending on its circumstances.
  
• Businesses that are asset rich. Many firms looking to refinance may be experiencing cash flow difficulties but still have significant physical assets. ABL can quickly unlock the hidden value within a company’s entire asset base, including its sales ledger, stock, plant, machinery, property, and even intangible assets such as its brand. An all-asset approach allows varying leverage as a business’ requirements change.
  
• Businesses looking to grow. Companies considering an acquisition may need to refinance to raise capital. Many firms struggle to fund sizable deals through cash reserves alone and may not want to take on an interest-generating loan or release equity to a third party. In these instances, ABL is an ideal solution.