Asset-based lending (ABL)
A loan or credit line secured on a mix of business assets, such as invoices, stock, equipment, property and sometimes intellectual property, with the amount based on what those assets are worth.
- Secured on invoices
- Secured on assets
How it works
Asset-based lending uses assets on your balance sheet as security. The amount you can borrow depends mainly on the type and value of those assets.
- Assets can include unpaid invoices (debtors), stock, equipment, machinery, property, and sometimes intellectual property such as brands and patents.
- Lenders lend a percentage of each asset's value (the loan-to-value). For example, they might lend no more than 50% of the value of stock.
- Assets that are easy to turn into cash get better terms.
- It can be set up as a term loan or a credit line, and can sit alongside other finance.
If you meet the criteria, money can arrive in as little as four weeks.
Upsides and downsides
Upsides
- Can unlock more funding than other products
- Usually few restrictions on how you use the money
- You keep ownership of the business
- Can be combined with other finance
Downsides
- Mostly for established businesses with sizeable assets
- Monitoring of the assets adds work and cost
- Hard credit checks show on your credit report
Risks
- The lender can take and sell the assets if you cannot repay
- Charges for early repayment or missed payments
What it costs
- How it is priced
- Interest on the money drawn, plus arrangement and monitoring fees
- Costs that are easy to miss
- Charges for repaying early or for missed payments
- A hard credit check during the application
Based on the value of the assets. It can unlock more funding than other products.
Does it fit?
Could fit when
- You are an established business with valuable invoices, stock, equipment or property
- You need a larger facility than invoice finance alone can give
Unlikely to fit when
- You have few assets on your balance sheet
- You are a small or new business
Who can use it
- Business types: Private limited company, LLP, Public limited company
- Needs sales (revenue)
- Usually aimed at established businesses with assets on the balance sheet
- Lenders carry out credit checks and due diligence on the business and its assets
Am I ready?
What a provider is likely to ask for. Tick what you have. Your ticks stay in this browser and nothing is stored. Checklist for all asset-based and specialist lending
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- Asset details
- Accounts and management information
- Existing charges checked
Regulation and protections
Commercial finance is not generally subject to statutory conduct regulation in the UK. Providers that are UK Finance members follow its Invoice Finance and Asset-Based Lending Standards Framework, with a free independent complaints process run by CEDR (awards of up to £50,000).
Types of provider: Bank-owned asset-based lenders; Independent asset-based lenders.
Also consider
Sources
- British Business Bank: What is asset-based lending? · checked 7 October 2026
- UK Finance: The Standards Framework for Invoice Finance and Asset-Based Lending (January 2025) · checked 7 October 2026