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How asset-based lending can help keep businesses moving through 2023

04-09-2023|By Anthony Gougeon, Marketing Manager

With only four months left to 2023 already, the UK economic picture remains as volatile as it has been since March 2020. Despite some seemingly positive GDP trends this year which saw it increase by another 0.2% in the second quarter after a 0.1% increase from January to March, economists are yet to agree when we may expect interest rates to decrease and whether they could return to a pre-pandemic level. Indeed, whilst the country has managed to avoid a technical recession which was almost certain to happen this year, it has also experienced the weakest growth in 65 years outside a full-blown recession, which, combined with a persisting high inflation, increasing interest rates and an ever-increasing cost of living, has continued to hinder business growth and ambitions.

There is still no certainty that the Bank of England believes rates have been set high enough to combat inflation, and there is still room to believe that further increases are yet to be made before they may slowly decrease. This means that businesses may continue to face higher costs on premises alongside many other pressures such as expensive materials and retaining employees struggling with increasingly less buying power who might be facing tough decisions, and so it is still important that business leaders keep on top of cashflow management and projections to safeguard the future of their venture throughout the remainder of the year and beyond.

What is asset-based lending?

Asset-based lending is a flexible and secured way of accessing funding that is tailored to the unique needs of a business, as an alternative to other forms of borrowing such as loans, overdrafts and credit cards. Because the funding is accessible and secured against one or more assets, it can often provide an easier and faster way for a business to access the cash it needs to meet its ambitions. Assets are varied and include receivables (where funding is provided against invoices yet to be paid), hard assets such as vehicles, plant and machinery, and property.

The right funding solution for a business

Working Capital Finance

Waiting to be paid is hard on any business, and late payments can lead to cashflow disruptions which can threaten the future of a company. Working Capital Finance offers a simple way to access the funds tied up in invoices yet to be paid against a small percentage of their value to help a business keep moving with additional breathing space.

Invoice Finance, also referred to as Factoring or Discounting, sees a lender advance payments when invoices are raised to help bridge the gap until credit terms are met, which could be up to 90 or 120 days. This means that the business can instantly reinvest the funds into whatever it is that will help it achieve its ambitions, be it additional stock, new premises, or employee wages for instance.

Some lenders offer wider flexibility to their facilities, such as opting to benefit from credit control and collection services which see the lender’s team deal with collecting payments as part of the agreement, which could be ideal for smaller enterprises or businesses short on staff. Additionally, some also provide Debtor Protection, a great way to further protect a business by covering against non-payments.

Other forms of Working Capital Finance include sector specific offerings such as Recruitment Finance, which offers all the benefits of an Invoice Finance facility alongside additional services that help to outsource payroll and back-office support, Construction Finance which is tailored to work with applications for payments, or Trade Finance, which can help extend credit terms from suppliers to up to 120 days in order to maximise cashflow opportunities.

Find out more about Ultimate Finance’s range of Working Capital Finance solutions.

Asset Finance

Investing in the right assets can accelerate business growth, but it requires cash, and for many businesses it can mean delaying growth or taking unnecessary risks. With Asset Finance, a business no longer needs to choose between cashflow and unlocking success by acquiring key assets. Providing quick access to funding, Asset Finance solutions allow businesses to purchase or lease expensive hard assets without disruptions to cashflow by eliminating the need for full or partial payments and allowing for monthly repayments that help cashflow strategies go further. Businesses can even use existing assets to refinance against to obtain a quick and secure cash injection when an opportunity too good to pass presents itself.

Most Asset Finance lenders will fund against most hard assets such as vehicles, machinery, plant or equipment, with soft assets such as software, IT equipment or office furniture usually harder to secure funding against.

Find out more about Ultimate Finance’s Asset Funding solutions and how they’re helping businesses keep moving.

Bridging Finance

Where property is concerned, speed and access to cash usually makes all the difference. Bridging Finance, also known as Bridging Loans, is a form of short-term funding that help bridge the gap when buying or bidding for property and selling another one. They can also be used to make a first-time property investment at an auction, refurbish owned properties to increase the yield or obtain a short-term cash injection for other business purposes.

There are many forms of Bridging Loans for various purposes, and at Ultimate Finance we provide residential loans for a range of specific uses such as Purchase Bridge, Development Exit, Development Finish and Exit and Refurbishment. Bridging Loans can unlock great opportunities by offering funding for up to 100% of purchase prices for Below Market Value purchases and some of them even allow for equity to be released.

Find out more about our range of Bridging Loans and our eligibility criteria.

Structured Finance

Many businesses could benefit from more than just one asset-based solution, and so at Ultimate Finance we provide Structured Finance facilities which see us fully customise a funding solution to ensure maximum funding potential by looking at the unique specificities of a business. We look at the cash tied up in property, hard assets or unpaid invoices and create a flexible multi-asset solution with no restriction on single line assets and that is easy to manage through a dedicated deal team and a single Relationship Manager that offers on-going support across the whole facility.

Find out how Structured Finance works.

Is asset-based lending the right funding solution for any business?

Asset-based lending has been proven to help businesses of all sizes and in all sectors meet their ambitions. However, as with every form of borrowing, it is always important to gain independent advice from an adviser, accountant or broker to make sure that it is the right decision for your business.

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Let’s get things moving

If you would like to talk to us about any funding needs, call us on 0800 121 7757, register as an Introducer or request a quote for your business today