By Gareth Jones, Head of Strategic Finance, Midlands – Virgin Money
The UK asset-based lending (‘ABL’) market has seen significant growth in recent years, driven by the increasing demand for flexible financing solutions. Asset-based lending involves securing loans with assets such as inventory, accounts receivable, and equipment, providing businesses with an attractive option to manage cash flow and accelerate growth initiatives.
‘The key benefit of an ABL solution is that the business converts assets into liquid funds, providing a cash flow fit for the where the borrower is in the business cycle. This is particularly useful for managing seasonal demands, covering unforeseen expenses, or capitalising on new business opportunities’ explains Andy Cole, Director for Asset Based Lending at Virgin Money.
‘Unlike traditional loans, ABL offers flexible revolving credit, allowing businesses to draw funds as needed to match their operational cycles or project timelines’.
‘Importantly as a business grows, typically so do its assets. ABL facilities can scale alongside the business, allowing continuous access to additional capital to support expansion, acquisitions, or other strategic goals’.
‘And since ABL is secured by assets it can result in more favourable funding terms when compared to alternative unsecured lending options’.
Andy Cole
At Virgin Money, in addition to our structured Cashflow Funding solutions we provide significant ABL funding lines to mid-market and corporate businesses, with our regional teams working in conjunction with our specialist ABL team to provide new and existing customers with a full and compelling suite of product solutions.
A key component with the suite of ABL facilities is Asset Finance, which allows businesses to spread the cost of fixed asset acquisitions over an agreed term, avoiding large upfront expenditures, helping preserve capital for other critical business areas. Importantly it provides access for a business to the latest machinery, equipment and technology, which is particularly beneficial in industries where technological advancements occur rapidly.
In addition, certain types of asset finance can offer tax advantages. For instance, lease payments can often be deducted as a business expense, reducing the taxable income of the company whilst hire purchase agreements could also allow businesses to claim capital allowances on the assets being acquired. Crucially for business owners, Asset Finance can alleviate bank reporting requirements compared to more standard loan products which releases management time to focus on their business’ ongoing success.
Virgin Money is one of the fastest growing Asset Finance providers in our industry across the UK both in terms of origination and balance sheet growth.
In discussion with Stuart Graham, Head of Asset Finance and ABL, he confirms: ‘Our Asset Finance portfolio has almost doubled since exiting lockdown. It is one of the fastest growing products within our Business Bank and we were recently shortlisted for Asset Finance Provider of the Year at the prestigious Asset Finance Connect Awards’.
‘We’ve released new products and we’re winning a staggering amount of business from customers who currently bank elsewhere. And in December 2024, our portfolio balance exceeded £1bn for the first time ever, which was a huge milestone for us’.
At Virgin Money we feel a responsibility to help local businesses grow and in doing so support the growth of our regional economies.
Supporting businesses with their borrowing requirements will be a key driver of this and whether it’s an Asset Finance, other ABL, or a cashflow funding solution, we have the appetite to continue the strong growth in our customer lending volumes evidenced in recent years.
We can also support business owners by sharing the knowledge and experience of our people as they work alongside businesses as a partner providing integrated funding, deposit and payment solutions for businesses of all sizes and all needs.
