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The Business Magazine July 2024
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Navigating the current funding landscape

PKF Alison Trant
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The rise of asset-based lending (ABL) providers continues to be significant, particularly in refinance and new debt raise requests. Notably, their specialist expertise in the construction and retail sectors has delivered solutions to businesses where high street lenders continue to exercise extreme caution.

The high street was very much open for conservatively leveraged, well managed, well capitalised businesses, and in many such cases we obtained a number of funding offers, bringing competitive tension to the process. But the ABL providers brought something different to the table.

Revolving facilities structured against suitable balance sheet collateral – be that stock, plant and machinery – provided higher quantum of debt and the revolving limit structure eased the debt servicing burden. We expect ABL to increase its role for all lending purposes this year and beyond.

We also expect ESG to feature more in lending dialogues as the major banks drive their ESG goals and deploy intelligent tools to equip frontline staff and customers in these areas.

Borrowers, especially on larger debt transactions, will be expected to articulate and demonstrate their own ESG strategy, and major banks are supporting this with discounted borrowing rates for delivering improvements and/or specific ESG purpose lending products.

Looking ahead to the second half of 2024, decision-making processes are expected to continue taking longer, as both lenders and borrowers exercise caution. Preparation of lending proposals will be crucial, with all lenders requiring good quality information, clear objectives, articulated strategy and high-quality financial data to support the request.

Talking to your professional advisers, who have significant experience of the whole debt funding market, lenders’ specific credit processes and evaluation, will ensure management teams save much time and frustration in a new or refinance process.

Overall, with a favourable interest rate forecast and eager lenders armed with capital, we anticipate a significant increase in both sides of debt funding activity as the year progresses. Whether it’s businesses seeking refinancing solutions or those aiming to fuel their growth ambitions, we expect growth in both the volume and completion of deals towards the end of the year.

email alison.trant@pkf-francisclark.co.uk or call 07787 668645. 

pkf-francisclark.co.uk

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