Ben Shaw

Asset-based lending: coming back for more

In previous articles, we have established that asset-based lending can provide high-net-worth individuals with fast and convenient access to finance for business purposes.

It is perhaps less well known that this convenience does not end once the client has drawn down the funds for which they originally applied.

Entrepreneurs are – by their nature – alert to new opportunities and, at HNW Lending, typically around a fifth of our clients come back to request more money at a later date for further investment in their business. Provided a client is able to post enough collateral or there is sufficient headroom on the existing loan, we are able to offer additional drawdowns, often on the same day.

One example of how this immediate access to funding can help to fuel the growth of a business is a client we first worked with nearly three-and-a-half years ago. The client originally raised money on his parents’ house in the UK to rent a high-end ski lodge in the Alps, which he then let out to groups of holidaymakers on a short-term basis. This proved to be a very successful venture and the client was able to repay the loan within six months. 

The next season, the client took another loan to rent another lodge, but this time he did not stop at one. As more suitable properties became available, the client would drawdown more funds. With experience of successfully delivering hospitality in the region, he also drew down funds to open cafés in the area’s ski resorts and has set up a popular chain, with the most recent branch being located in a fashionable five-star hotel.

The business now has private equity investment and a bright future, which has been made possible because of the client’s ability to make the most of every opportunity with quick and convenient access to funding for further investment.

Asset-based lenders may not compete with banks on rate, but they can deliver the speed and flexibility your client needs to make a success of their business. 

Another area where this flexibility can be beneficial is broker fees, and a good asset-based lender should be able to work with you to identify the most appropriate broker commission to add to the loan agreement. 

There is no set product matrix: the focus is on building the best loan structure to get the deal done and help the client to achieve their objective.

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