This is the hottest sector of the Invoice Discounting market.
Lenders have realised that they can add value to a customers requirements by looking beyond just the debtor book. By including a company's stock, plant machinery and property they can provide a much bigger revolving line of credit. By flexing the facility in this way advances up to 150% of debtors can be achieved.
This type of finance is particularly suited to: -
- Management Buy Outs /Buy Ins
- Re-finance of existing bank overdraft
- Turnaround Situations
As much more funding can be released than a conventional business Overdraft, there is less need to call on venture (or should that be vulture) capitalists for help. This ensures maximum retention of equity in the hands of management.
Typical advance levels are:-
- Debtors 90%
- Raw Materials 30%
- Finished Goods 60%
- Plant & Machinery 80%
- Property 60%
The starting level for Asset Based Lending is £1m with transactions over £100m not uncommon.
For larger deals (£5m plus) senior debt and mezzanine debt can also be provided.
Amongst the limited number of Invoice Discounters who can provide total asset based finance solutions there is a keen appetite for this type of business and therefore costs are equally competitive.