In this latest piece, Jeff Greenfield, Sales Director (South) at PCF, discusses the alternative way forward…
The marketplace is undergoing a significant transformation, driven by shifting dynamics in lending to viable businesses. With traditional lenders tightening their criteria, SMEs are increasingly finding themselves over-leveraged, struggling under the weight of amortising debt structures that no longer fit their evolving needs.
In response, the market has seen a sharp surge in demand – particularly from debt advisors – seeking precipitated funders: lenders stepping in to meet urgent financial needs. Historically reliant on high street lenders for support, these businesses are now actively searching for alternatives to escape mounting debt burdens and rigid, inadequate product offerings.
Asset-based lending is playing a pivotal role in bridging this gap, providing much-needed flexibility through non-amortising facilities designed to support real cash flow needs – giving SMEs the breathing room essential for stability and growth.
Over-leveraged and under pressure
Many businesses – once thriving under conventional financing arrangements – now grapple with the reality of debt servicing. Over time, the push for growth and expansion has led to increasingly leveraged positions, often with amortising structures that eat into cash flow. As a result, businesses seeking to realign their financial footing are exploring alternative solutions that provide liquidity without the stringent repayment schedules that conventional loans demand.
Asset-based lending offers a unique avenue to unlock working capital tied up in assets, providing businesses with non-amortising facilities that give breathing space for strategic planning and operational agility. This shift signifies not just an opportunity, but a necessity for businesses that need financing solutions aligned with their actual cash flow and asset value rather than rigid repayment timetables.
The product gap in SME financing
One of the most common challenges in today’s SME lending landscape is the lack of appropriate multi-asset facilities. Many SMEs need financing structures that cater to a range of assets – including inventory, equipment, receivables, and property – yet conventional lenders often fail to provide an integrated approach.
Asset-based lending stands out as an alternative that can bridge this gap, offering SMEs access to capital based on their diverse asset portfolios rather than limiting them to narrowly structured loan agreements. As businesses navigate an increasingly complex economic environment, lenders who offer innovative, multi-asset financing solutions are positioned as strategic partners in long-term growth.
Driving change in the market
The lending market is evolving, and businesses must adapt to stay resilient. Asset-based lenders have a crucial role to play in supporting SMEs by offering financial products that prioritise flexibility, liquidity and operational sustainability. By addressing the resulting pressures of unfit debt and the SME financing product gap, lenders can drive real change in the market – ensuring businesses have the right tools to thrive in an uncertain economic climate.
The shift toward asset-based lending is not simply a trend; it is a fundamental response to the realities faced by today’s SMEs. As traditional lenders tighten criteria and SMEs seek alternatives, ABL stands ready to provide solutions that empower businesses to grow with confidence.
At Praetura Commercial Finance we place business owners central to our lending approach, taking the time to understand their unique needs and ambitions. By offering direct access to senior decision-makers, we ensure swift, informed decisions – delivering tailored financial solutions at speed. If you have a client in your portfolio who would benefit from flexible funding solutions, or would like to explore how asset-based lending can support their growth goals, please get in touch today.
Praetura Lending consists of five companies that work collaboratively together to offer structured individualised solutions for SMEs: Praetura Commercial Finance, Praetura Invoice Finance, Praetura Asset Finance, Kingsway Finance and Zodeq.
