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Asset-backed lending 'a mainstream source of business finance'

Asset-backed lending (ABL) has become an increasingly popular method of borrowing for businesses wanting fast access to capital, to the extent that it has become a "mainstream form of finance", according to one lender.

Lloyds TSB states that the flexibility of ABL means that businesses can have access to a borrowing facility where overdrafts and loans might not be available, or are deemed unsuitable.

Mike Scowen, regional director of Lloyds TSB Commercial Finance, explained to the Manchester Evening News that with ABL, the lending criteria are defined by a company's growth cycle and strategy, rather than turnover and sector.

"The speed with which ABL releases cash tied up in a business' assets makes it an ideal means of funding the extra stock required during seasonal peaks in sales, or when a sizable contract is secured," he remarked.

Mr Scowen added that many businesses use this form of finance as a precautionary measure, with pre-approved facilities in place for fast access to capital for financing fast-changing events like acquisitions and profit opportunities.