New Year, New Vision: Make 2026 Your Best Year Yet With Asset-Based Loans
As 2026 approaches, many businesses are setting ambitious goals for growth, expansion, or restructuring. But achieving those ambitions often depends on having the right funding in place. If your company owns valuable assets like property, equipment, or stock but lacks liquidity, asset-based lending could be the key to unlocking your business potential. This flexible form of finance allows you to use your assets as collateral to secure funding, often at competitive rates and with fast approval times. If you’re what is known as an ‘asset-rich, cash-poor’ business in need of unlocking some funds for growth or overheads, then an asset-based loan could be the ideal solution for you.
Whether you’re planning to boost working capital, invest in operations, or navigate a period of change, asset-based loans offer a practical, scalable way to turn your business resources into real financial power. We’re exploring exactly what that means for you below.
What is an asset-based loan?
Asset-based loans are a type of financing that uses business assets, such as inventory, accounts receivable, property or equipment, as collateral against a loan. These loans are great for larger companies with sizeable turnovers, or asset-rich companies undergoing a period of restructuring or have high working capital needs.
How does asset-based lending work?
Asset-based lending tends to be structured in one of two ways, these are:
- As a term loan where you receive a lump sum of cash to be repaid in monthly instalments, or
- As a line of credit, which enables you to pull funds out as and when required, where you’ll only pay interest on the amount you borrow.
The amount you can borrow with an asset-based loan is contingent on the value of the assets you provide as security. This is calculated by your lender using the loan-to-value (LTV) ratio, which involves dividing the loan amount by the value of the asset. The amount can also depend on the type of asset you plan to use. You’re more likely to receive a larger sum if the lender could convert the asset into cash quickly (known as liquidity) should you default on your repayments. Examples of these types of assets include accounts receivable, Certificates of Deposits and foreign currency.
By contrast, lenders consider loans secured with physical assets to be a higher risk. Therefore, if you use a real-world asset such as machinery or fleet vehicles, there’s a chance you’ll receive a smaller amount.
What assets can be used for asset-based lending?
You can use a range of assets for asset-based lending, including:
- Property
- Plant and machinery
- Equipment
- Inventory & stock
- Receivables, such as unpaid invoices
- Intellectual property
Pros and cons of asset-based loans
Asset-based lending has a series of advantages and some disadvantages that you should consider before applying for finance. The key benefits of asset-based lending include the fact that you can typically borrow more with asset-based lending compared to other ‘unsecured’ finance options, where the lender has no collateral. Second, you’ll have the flexibility to spend the funds exactly how you’d like to, because there are no defined spending terms. Third, interest rates can be lower than other types of finance, meaning you’ll pay back less interest overall. Finally, there is usually a fast approval process for asset-based lending, making it a good option if you need a quick turnaround on cash.
Every form of lending has some downsides, which is why it’s important to appreciate what these can be when it comes to asset-based loans. You’ll need to be aware that the lender can sell the asset to recoup money if you don’t keep up with your repayments. When applying, you must undergo a credit check, and you’ll be faced with late or early repayment charges if you pay back early or don’t meet your repayment deadlines.
Want to see if you’re eligible without a hard credit check? You can do so here.
Am I eligible for an asset-based loan?
You’re more likely to qualify for asset-based lending if:
- Your business is well-established, and
- The business owns valuable business assets, such as equipment or property.
At White Oak UK, our typical eligibility criteria demands that you are a larger business that has been trading for 3 years or more, with a turnover of between £10m – £250m. You can find out more about our asset-based lending services here.
What to consider before choosing asset-based lending
Before you apply for asset-based lending, it’s important to analyse your balance sheet to determine the value of your assets. You’ll also need a clear and concise paper trail for the accounting history of the business. Lenders will need to scrutinise both your paperwork and the assets themselves to deem you a healthy option in terms of risk, and to determine the amount they’re willing to loan you.
Other important considerations include what your ideal terms would be, whether the repayments are going to be affordable, and what the total loan repayment amount comes to with all interest. We would always suggest seeking independent financial advice before you make any big business decisions.
What are the alternatives to asset-based lending?
Not sure if an asset-based loan is the right fit for you? You could also consider:
Invoice finance
Tired of chasing up unpaid invoices? In need of cash that’s yet to be paid to you? Invoice finance enables you to borrow up to 95% of your unpaid invoices in advance, and the lender can do all the chasing for you.
Commercial loan
If you just want a straightforward business loan to facilitate growth, expansion or even just cover your overheads, a commercial business loan could be the right option for you.
Cash flow loan
Whether it’s a temporary stopgap or to take the strain off your cash flow, a working capital loan is the perfect small business support. These loans provide flexible financial funding to manage daily operations, address short-term liquidity challenges, and handle unexpected costs.
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