Asset-based Lending Global Market Report 2024

The asset-based lending market size has grown rapidly in recent years. It will grow from $697.75 billion in 2023 to $787.28 billion in 2024 at a compound annual growth rate (CAGR) of 12.8%. The growth observed in the historical period can be attributed to several factors, including economic downturns and associated credit challenges, the demand for working capital financing, the cyclical nature of industries, corporate restructuring, and turnarounds. Asset-Based Lending (ABL) has been particularly instrumental in addressing asset-rich but cash-poor situations, offering businesses a viable financing strategy during challenging economic conditions. These dynamics contributed to the increased adoption and significance of ABL as a financial solution during the historic period.

The asset-based lending market size is expected to see rapid growth in the next few years. It will grow to $1.26 trillion in 2028 at a compound annual growth rate (CAGR) of 12.5%. The anticipated growth in the forecast period can be attributed to global economic trends and increased volatility, a rising demand for non-traditional financing solutions, an expanding role in cross-border transactions, a heightened focus on working capital optimization, and industry-specific tailoring of Asset-Based Lending (ABL). Major trends expected in the forecast period encompass the expansion of cross-border asset-based lending, the application of artificial intelligence (AI) in credit decisioning processes, collaborative efforts between traditional lenders and fintechs, a concentrated focus on non-traditional collateral types, and the integration of risk management analytics into ABL practices. These trends collectively contribute to the projected growth and evolution of Asset-Based Lending in the forecasted period.

The anticipated surge in loan demand is expected to significantly drive the growth of the asset-based lending market moving forward. Loans, a financial arrangement where one party, typically a bank or financial institution, provides funds or assets to another party, offer opportunities for asset-based lending. This lending method provides flexible financing, improved liquidity, and scalability, making it an attractive choice for borrowers. As reported by ABL Advisor in June 2023, the total loans in the US for 2021 reached $502.3 billion, marking a notable 10% increase from the previous year. This escalating demand for loans is a primary catalyst propelling growth within the asset-based lending market.

The escalating need for alternative financing avenues is poised to propel the expansion of the asset-based lending market in the foreseeable future. Alternative financing options, emerging outside the conventional finance system such as banks and capital markets, offer businesses various channels to access funding and capital with advantages such as lower costs, enhanced flexibility, and simplified loan approval processes. Asset-based lending stands out as a particularly versatile and comprehensive financing alternative, surpassing conventional loans and grants. For instance, as highlighted by the Pew Research Center in April 2022, tens of millions of Americans engaged in alternative financing arrangements, where buyers make direct payments to sellers, showcasing the growing traction of non-traditional financing methods. Consequently, the rising demand for alternative financing solutions continues to fuel the momentum of the asset-based lending market.

The forecasted impact of higher interest rates associated with asset-based lending loans is expected to impede the growth of the asset-based lending market. Asset-based lending often entails higher interest rates compared to traditional bank loans due to the increased risk associated with lending against collateralized assets. This higher cost of borrowing limits market expansion and diminishes its attractiveness to potential borrowers. As highlighted by Drip Capital Inc. in November 2022, asset-based lending typically features an annual percentage rate (APR) ranging from 7% to 15%, with additional fees adding to the overall financial burden for firms availing of such loans. Consequently, these elevated interest rates serve as a hindrance, stunting the growth potential of the asset-based lending market.

Prominent companies operating within the asset-based lending market are actively engaged in developing platforms integrating advanced technology, particularly sophisticated trading technology, to drive revenues by enhancing returns, transparency, and customization. Sophisticated trading technology involves leveraging advanced tools, software, and infrastructure to execute trades, analyze data, and manage trading operations efficiently. This approach aims to improve trading performance, reduce latency, and enhance decision-making processes. For example, in April 2021, Fidelity Investments, a renowned US-based financial services corporation, unveiled the Fidelity Agency Lending digital platform. This comprehensive platform integrates Fidelity's extensive trading expertise with sophisticated technology, providing businesses with the infrastructure, proficiency, and specialized tools to enhance returns, offer program customization, and ensure transparency in lending operations.

In May 2021, TD Bank Group, a prominent Canada-based banking and financial services corporation, successfully acquired the Canadian Direct Equipment Finance business from Wells Fargo & Company. The acquisition, conducted for an undisclosed amount, was strategically undertaken by TD Bank Group to strengthen its position and competitiveness within Canada's equipment finance industry. The move is aimed at expanding the bank's ability to cater to a broader spectrum of business customers seeking specialized financing services and leasing solutions. Wells Fargo & Company, a US-based financial services entity, is recognized for its expertise in asset-based lending.

Major companies operating in the asset-based lending market report are JPMorgan Chase and Co., Wells Fargo And Company, HSBC Holdings plc, Goldman Sachs Group Inc., BMO Harris Bank N.A., Barclays Bank PLC, Hilton-Baird Group, KeyCorp Limited, Huntington Business Credit, Lloyds Bank plc, BB&T Corporation, CoreVest Finance, Crystal Financial LLC, Triumph Commercial Finance, CIT Group, Bibby Financial Services, Sterling National Bank, Berkshire Bank N.A., White Oak Financial LLC, Porter Capital Corporation, First Capital Federal Credit Union, LSQ Funding Group L.C., Action Capital Corporation, LQD Business Finance LLC, Capital Funding Solutions Inc.

North America was the largest region in the asset-based lending market in 2023. The regions covered in the asset-based lending market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa The countries covered in the asset-based lending market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The asset-based lending market includes revenues earned by entities by providing supply chain financing, trade financing, cash flow-based asset-based lending, and equipment financing. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The primary types of asset-based lending include inventory financing, receivables financing, equipment financing, and other variations. Inventory financing involves using a company's inventory as collateral to secure a loan or line of credit, playing a significant role in the broader landscape of ABL transactions. Different interest rate structures, such as fixed rates and floating rates, are utilized in ABL, catering to the diverse needs of borrowers. Asset-based lending finds application across various end-users, including large enterprises and small and medium-sized enterprises.

The asset-based lending market research report is one of a series of new reports that provides asset-based lending market statistics, including asset-based lending industry global market size, regional shares, competitors with an asset-based lending market share, detailed asset-based lending market segments, market trends, and opportunities, and any further data you may need to thrive in the asset-based lending industry. This asset-based lending market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.