Making assets work - Instead of taking out a traditional overdraft to fund expansion and RD, asset-based financing offers manufacturing firms a way to convert balance sheet assets into operating cash

摘要

IN THE EVER-CHANGING WORLD of business finance, there is a new kid on the block in the form of asset financing. The essence of asset financing is simple. Instead of taking out a bank overdraft or loan for operating capital, you borrow money on your existing assets; unencumbered plant, equipment, property and book debts. It is even possible to borrow on your intellectual property (IP). The core principle behind asset-based lending opportunities is that they exactly match the funding requirements of the business against assets on the balance sheet. The difference from traditional leasing and hire-purchase is that you use the funding from existing assets to secure new ones, to expand, or even fund RD. 'The increasingly strong regulatory environment has contributed to the growth of asset-based lending in the UK,' said Andy Martin, head of manufacturing for Barclays. 'Regulation around issues such as preferred creditors and retention of title are better dealt with by asset-based finance than the more traditional forms of lending.