We provide specialist advice and support to Asset Based Lenders across the UK and Ireland; supporting both domestic UK and cross border European transactions.
Asset Based Lending ("ABL") is becoming an increasingly popular alternative to traditional funding. ABL allows businesses to acquire funding against all asset classes including;
- Accounts Receivable
- Plant & Machinery
We provide specialist advice and support to Asset Based Lenders across the UK and Ireland; supporting both domestic UK and cross border European transactions. Our advice also extends further to Corporate Finance Advisors, Private Equity Investors and direct to businesses.
Collateral valuations and due diligence surveys are an important part of the secured asset based lenders considerations when considering new and reviewing existing portfolio - ABL transactions and are a major requirement of the credit process. These valuations and surveys support the lenders structured deal offering and are vital in the decision making process for secured lending on acquisitions, refinance and MBO/MBI deals.
We have a unique team with extensive UK, European and US experience in collateral valuation, due diligence, risk profiling, portfolio management and exit strategy.
We offer collateral valuation and due diligence primarily on the following asset classes:
- Accounts Receivable
- Commodity Inventory
- Commercial and Industrial Manufacturing Inventory
- Wholesale Inventory
- Plant and Machinery
With the knowledge and experience and given our national coverage, we have the range of skills to support the needs for collateral reviews, due diligence, valuation for all secured lending requirements; whether new business, managing existing lending portfolios or advising on risk and recovery profiles.
Asset Based Lending Specialist Support
In an ever-changing market; and as uncertain factors rest on the horizon, borrowers and lenders together face many challenges. Christian Humphreys, partner in our asset-based lending team commented on the specialist support that ABL can offer.
Asset Based Lending (“ABL”) remains an important route to funding for many retailers, wholesalers and manufacturing small to medium enterprise (“SME”) businesses in particular; and will continue to be a key access to funds both in its current guise and in future form as funding and security pools change. ABL remains the most fluid and flexible form of security with SMEs reliant on floating charge lending incorporating inventory revolving facilities along with the primary invoice finance form of ABL supported by additional plant and machinery and property term loan facilities.
Investors use ABL to support acquisitions, as do MBO/MBIs deals, both of which have maintained traction amid economic and market uncertainty. Brexit has presented many challenges for UK businesses reliant on or exposed to Europe with some stockpiling due to the unknown, tariffs and variable trade restrictions that may well be implemented, which can prove to be an issue when cashflow is tight. Purchasing in advance leads to reduced cash availability in order to thrive with added costs hindering a business. ABL eases cash flow issues and concerns via fixed and floating charge facilities.
ABL enables business to raise higher levels of funding to facilitate strategic plans or simply release additional working capital. ABL can offer higher levels of funding than invoice finance alone and release working capital against inventory, plant and machinery and property as noted. ABL is a bespoke solution, designed around a borrower’s specific requirements. For businesses with proof of strong cash generation in the past and positive cash forecast for the future, cash flow loans may also be available to further top-up funding lines where appropriate.
Further risks loom with UK ABL under threat from the 2020 finance bill plans, with the Crown being given secondary preferential creditor stats in respect of certain tax liabilities. This enhanced status is at the cost of floating charge security and would likely impact inventory in particular. Undoing the Enterprise Act effectively leads to the Crown once more ‘jumping the queue’. Lenders secured on an inventory floating charge may well be exposed and under collateralised in an insolvency. Crown liabilities need to be up to date to mitigate exposure and risk. The UK needs reliable access to ABL funds to operate; and putting floating charge security at risk may impact access to flexible funding in the future, which will only be detrimental to HMRC in the long term.
Further changes to be introduced in April 2020 include an increase to the maximum prescribed part. This is expected to increase from £600,000 to £800,000.
We are perfectly positioned to support lenders and SMEs through the changes, challenges and risks ahead offering advice and due diligence to assess the exposure and options to mitigate the risk. We provide independent and specialist all asset class valuations and sector guidance relating to inventory floating charge and receivable fixed charge facilities, along with plant and machinery and property term loans.