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ARTICLE · 13 FEBRUARY 2019

Asset-Based Lending: Maximise Your Debt Headroom?

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We have advised on a number of significant asset-based lending transactions in Scotland in the past 12 months.

United KingdomFinance and Banking

We have advised on a number of significant asset-based lending transactions in Scotland in the past 12 months. This article considers the benefits of an asset-based lending structure and the key themes for lenders and borrowers to consider as against more traditional forms of secured lending.

Asset-Based Lending

Asset-based lending is a specialist form of secured lending where the loan is more closely tied to the borrower's assets than is customary with a typical secured loan. The lender advances funds to the borrower based on an agreed percentage of the value of certain types of assets, most commonly receivables, but often multiple asset classes are used including inventory, real estate, machinery and equipment. As greater focus is placed on collateral and liquidity than cash flows, asset-based lending facilities may provide greater headroom and debt capacity for certain corporate borrowers.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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