£3.2M Asset-Based Lending Facility Using Inventory and Receivables Finance

Key Details:

• Circa £3.2m total facility
• Multi-asset structure (receivables + inventory + term loan)
• Reduced reliance on supplier credit
• Enabled bulk purchasing and margin improvement

A fast-growing business with a turnover of approximately £8m required additional funding to support increasing demand and optimise its purchasing strategy. Operating in a high-volume environment, the business had a significant proportion of capital tied up in inventory, while also experiencing timing gaps between supplier payments and customer receipts. This created ongoing pressure on working capital and limited the company’s ability to fully capitalise on growth opportunities.

Traditional funding options, including standard term lending and overdraft facilities, did not fully recognise the value of inventory as an asset class. As a result, the business was constrained by an insufficient facility size and remained reliant on supplier credit and short-term funding, which restricted flexibility and reduced purchasing efficiency. This structure made it difficult to secure stock at optimal pricing and ultimately limited the company’s ability to scale effectively.

To address this, we structured a circa £3.2m asset-based lending (ABL) facility, combining a £1.8m receivables finance line, a £1.0m inventory finance facility, and a £400k term loan. This multi-asset approach enabled the business to access capital across its balance sheet, leveraging both outstanding invoices and inventory to maximise funding availability.

By reducing reliance on supplier financing and introducing a more flexible working capital solution, the facility allowed the company to purchase stock in bulk, improving supplier terms and directly enhancing margins. In addition, the structure provided scalable headroom aligned to trading performance, ensuring the funding solution could grow alongside the business and support its ongoing expansion.