Make the Most of Your Assets

24 September 2009

Blog titles like this can sometimes attract bewildered adolescents and Carry On fans looking for links to a different genre of sites altogether. Imagine their frustration when they frantically stumble onto an accountant’s website!

So best to say at this stage that if you’re happy to be here I’m going to talk about asset based lending. And if you’re not, pull yourself together and go and do your homework.

The misdirected visitors to this blog aren’t the only ones sweating at the moment. While there is anecdotal evidence that some areas of the economy are showing the first signs of recovery, we are still fearful of false dawns. Banks haven’t yet regained the trust of businesses, and there is little evidence to suggest that the much publicised state support has found its way to its suggested target.

So it may be time to look for finance from a lender who will use your debtors or plant and machinery as security. Commercial property prices have plummeted over the last three years but the one asset that doesn’t deflate is the value of your book debts, the mainstay of asset based lending.
There are some imaginative products which provide stock funding. And it’s likely that other products will emerge as competition increases.

Other lenders are increasingly standing in the banks’ shoes but you must be realistic in what you can expect to achieve. 

The asset based lending market has always been fairly prudent. They look at risk differently to banks. ABL lenders have a keen eye on the value of their security and they are being a little more cautious than they were eighteen months ago.

As the mainstream banks have shown little sign of relaxing they have pushed a lot of smaller customers down the ABL route. But if this is an area you want to look at, go out to the independent market to find the best deal. Few lenders will be pushing prices down at the moment, but the competitive nature of the market means that increases won’t be exaggerated.

Stuart Wilkin writes for Insider

Posted  24 September 2009


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