Growth is exciting but funding it can be complicated because the demands of working capital scale alongside your business. Larger orders, new equipment, and entering fresh markets all put a strain on cashflow.
This is where Asset-based lending (ABL) comes in, turning the pressure of growth into the fuel that drives it. ABL can unlock cash tied up in invoices, property hard assets, and plant and machinery, creating a revolving facility that flexes with sales, so momentum stays on your side.
Why growing businesses need cash
Growth accelerates everything, including cash outflows. You’re funding stock, payroll and suppliers long before income arrives. Add capital expenditure – like machinery, vehicles, premises and technology – and the outlay jumps again.
In today’s high-cost climate, even profitable businesses can face working capital gaps at the most crucial moments.
Additionally, asset-based lending can turn your balance sheet into headroom. It supports growth today while potentially enabling orderly shareholder cash extraction or enabling a gradual retirement, helping successful owners extract value without disrupting day‑to‑day operations.
By leveraging receivables, stock, plant and property — plus up to 95% of eligible invoices within 24 hours — you keep working capital healthy. You can also add optional Debtor Protection for extra resilience.
While growth should always be the goal, it shouldn’t come at any cost. Providing trade credit to customers needs to be considered and well managed. Concentration of trade into one or two customers can be catastrophic if one or both were to fail. Therefore, we work closely with clients to help control those risks — supporting credit limit decisions and offering protection products against late payment or customer insolvency, so scaling up doesn’t mean stretching too thin.
Learn more about Debtor Protection.
Today’s pressures on growing businesses
Growth may look favourable on the surface, but behind the scenes, barriers are mounting for UK businesses as they scale.
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Sluggish national growth
According to the British Business Bank’s Small Business Finance Report1, the UK economy recorded just 0.9% full-year real GDP growth last year. And the 2025 Budget does little to shift that picture.
Changes to business rates from 2026 – including a new high-value multiplier for larger industrial and commercial properties – mean SMEs outside retail and hospitality could face higher operating costs.
With investment decisions already being delayed, the broader market isn’t providing the lift that growing businesses need. They can’t rely on a booming economy to carry them, so must generate cash internally.
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Rising employment and tax costs
According to the British Chambers of Commerce’s Q3 2025 survey2, taxation is now the top concern for UK firms: cited by 59% of respondents (up from 56% in Q2 and far higher than pre-2024 levels).
2025 Budget measures are likely to reinforce these pressures. From April 2026, the National Living Wage will rise by 4.1%, adding to wage bills in labour-intensive sectors, while earlier increases to employer NICs continue to push up labour costs by nearly two percentage points.
Businesses have already described the NIC increase as “a disincentive to further employment” and something they “cannot cope with… alongside further taxation.
These pressures are colliding with a labour market that’s starting to weaken. New ONS figures3 show UK unemployment has risen to 5%, the highest it’s been since early 2021. Employers are reporting softer demand, delayed hiring plans and reduced confidence ahead of the budget and all of this adds further weight to payroll decisions.
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Sticky inflation
Inflation has eased slightly, slipping to 3.6% (as of October4 2025). This is the first drop since March, and the lowest rate since June. It remains well above the Bank of England’s target of 2%, however, and prices are still rising: just at a slower pace.
For a growing business, this compounds pressure at every stage of the cycle:
- Rising input prices make stock, materials and services more expensive
- Suppliers pass on increases faster than customers can absorb them
- Wage expectations rise, too, making it harder to hire or retain talent without adding cost.
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Working capital becomes more fragile
When growth slows or operating conditions tighten, working capital becomes a bottleneck.
The British Chambers of Commerce5 reports that in addition to taxation, inflation is now the second top concern (57%) for UK firms, with businesses citing “spiralling costs in almost all cost areas.”
ONS BICS6 data echoes this, showing a persistent share of businesses facing higher input and operating costs across materials, utilities, and services. And SME representative bodies like the Federation of Small Businesses (FSB)7 continue to highlight squeezed margins and rising overheads as ongoing constraints.
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Sector – and demand-specific shocks
Some sectors are doing better; others are stagnating or contracting.
For example, Bank of England8 data shows that defence, marine and aerospace exporters are reporting strong order books, food and soft drink output is modestly ahead of last year and both professional and financial services continue to thrive.
At the same time, manufacturing output is weaker than a year ago, new commercial property development remains down and consumer-facing sectors are seeing subdued volumes when compared to previous years.
For a growing business, the risk isn’t just “I’m scaling”. It’s “I’m scaling into conditions that offer less forgiveness for error”.
Put plainly: growth is good, but the margin for misstep is getting narrower.
How ABL supports growth trajectories
Working capital that keeps pace with demand: ABL releases liquidity tied up in receivables and hard assets, giving businesses the working capital to keep moving as orders increase. Instead of waiting weeks for customers to pay, cash becomes available immediately — supporting production, payroll, supplier payments and day-to-day operations at the speed growth demands.
Capex investment without draining cash reserves: Growth often requires new machinery, technology, fleet, or infrastructure, but paying for that upfront can slow momentum. ABL structures allow businesses to fund these investments without exhausting cash buffers, giving them the equipment they need today while preserving the liquidity required for tomorrow’s opportunities.
Facilities that grow with the business: Because ABL is secured against assets, the available funding naturally increases as the business expands. More sales mean more receivables, more stock, and more headroom. This allows facilities to scale without constant renegotiation, delays, or repeated credit processes. It creates a dynamic funding line that rises in step with demand.
Resilience built into the structure: As turnover grows, so does exposure to customer credit risk. Debtor protection adds a layer of resilience, safeguarding against late payments or bad debt that could otherwise disrupt cashflow. For businesses scaling quickly — especially in uncertain market conditions — this protection helps keep momentum on track.
A proven engine of business growth: In 2024 alone, ABL supported £313bn of client sales – near-record levels and a clear demonstration of how asset-based funding is now supporting businesses across the UK economy (UK Finance, Q4 20249).
Funding flexibility beyond growth
As well as a tool for expansion, ABL can also be a strategic solution for extracting value from a mature business. Whether it’s a family succession, a shareholder exit, or a gradual retirement wind-down, asset-based lending can provide the liquidity needed to move forward without sacrificing control.
While many owners first consider external investment, ABL offers an alternative that avoids equity dilution. By refinancing against plant, machinery, vehicles or property, we help businesses unlock the value they’ve already built and structure facilities that make sense and stay the distance.
We often support cash extraction for:
- Family business transitions, where the next generation is taking the reins
- Retirement wind-downs, with phased cash extraction over multiple years
- Progressive MBOs, enabling the management team to take ownership while returning value to shareholders.
- Private equity refinance – clearing PE support facilities and/or loan notes
Why asset-based lending is built for business momentum
Unlike traditional term debt, ABL flexes with the business. As sales grow, the available funding line can increase, so liquidity keeps pace with demand. This gives management the confidence to plan ahead without static limits or lengthy refinancing cycles.
And because ABL facilities are secured against real assets, businesses can unlock more value as they scale while keeping equity intact.
With challenger lenders now holding around 60% of SME lending (UK Finance, Q4 202410), it’s clear that funding models are shifting. More businesses are looking for agile, asset-based structures that match their growth rhythm. Lenders like Ultimate Finance are helping to deliver that flexibility in practice.
Case study: how structured finance enabled a £2m business acquisition
An established engineering manufacturer needed to secure the purchase of a long-standing cutting tools business. Like many acquirers, their challenge was how to generate enough liquidity at the right moment.
Working closely with the management team, we assessed every available asset to understand how much value could be unlocked.
The result was a £2m Structured Finance facility combining Invoice Finance, Asset Finance and a Bridging Loan, giving the buyer the certainty and headroom to complete the deal.
Most importantly, the multi-asset structure allowed the acquirer to fund 100% of the share purchase without putting pressure on working capital.
With the transaction complete, the business now benefits from hands-on support from our Relationship Management team: a clear example of how Structured Finance can maximise funding potential and keep ambitious deals moving.
Funding that moves with your business
At Ultimate Finance, we understand that growth doesn’t follow a straight line. It accelerates, pauses, and pivots. Funding needs to move with it.
Our joined-up approach brings together Invoice Finance, Asset Finance, Commercial Property Loans and Cashflow Loans, enabling businesses to access funding that scales in real time. And with direct access to decision-makers and a proven track-record our clients know they can act fast when opportunity calls.
ABL is built for momentum, and so are we.
Three T’s, one clear message
Whether it’s Turnaround, Transaction, or Trajectory, asset-based lending is one of the most adaptable funding tools on the market today.
It helps businesses stay resilient through challenges, move decisively through deals, and scale with confidence when growth demands more.
If you’d like to explore how ABL could support your clients, we’re here to support.
