How blockchains are impacting asset-based lending
Asset-based lending (ABL) is a loan or line of credit issued by a business that is secured by some form of asset/collateral. There are various types of collateral used in asset-based lending including inventory, machinery, equipment, accounts receivable and other balance-sheet assets. ABL offers companies an alternative source of finance which can be very flexible and cheaper than factoring. Although not all of a company’s assets may qualify as collateral, it may result in the company being required to part with a valuable asset (such as a price of equipment or machine) in the event of a default - and ABL can sometimes be more expensive than a traditional bank loan. Nevertheless, the size of ABL globally was valued at $561.76billion in 2022 and the total asset-based lending revenue is expected to grow at a CAGR of 11.32% from 2023 to 2029, reaching nearly $1.2 Trillion. In the UK alone ABL is worth £314billion.
The private ABF market’s rapid growth seems set to continue
Source: KKR
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