Asset based lending against IP and ideas

Andrew Rutherford

Business Leader met with Andrew Rutherford, who is the Commercial Director at Arbuthnot Commercial Asset Based Lending (ABL) division.

In your opinion why is the Asset Based Lending (ABL) market growing?

It’s a combination of factors, such as the clearing banks still not providing businesses with enough growth funding. Overdrafts can be difficult to obtain and also keep in place, but you don’t have that issue with ABL.

The beauty of Asset Based Lending (ABL) is that it provides businesses with certainty and can’t be withdrawn overnight, unlike an overdraft, for example. It supports businesses through their growth cycle and is also a good source of additional funding in scenarios where a business might look for a suite of options, such as building stock levels, making acquisitions and extending their product lines and services.

Can you now lend against IP and ideas?

Traditionally, we have always lent against physical assets such as debtors, stock and plant & machinery, for example. But what is happening in the USA – and the UK tends to follow market trends there – is that IP is being valued as an asset that we can lend against. This is not mainstream yet in the UK but it’s exciting and could fuel further growth in the market.

For business leaders that may not know – how can you best prepare your business when applying?

It’s fundamentally basic financial information that you need in order to apply, and most established SMEs will find that pretty straightforward. Some key points include ensuring that you have accounting software systems in place, aged debtor reports and a detailed breakdown of assets.

What trends are you seeing in the market?

Asset based lending (ABL) in the UK is still geared primarily towards more traditional industries such as manufacturing, business services, wholesale and distribution; and we’re seeing major growth from these sectors, with businesses actively applying for funding.

Lending numbers are up across the board and we’re also seeing trends for more enquiries pegged to this period of uncertainty. This is because businesses require certainty around their funding when times are challenging.

We’re also seeing ABL being used as a lever to fund business sales, MBOs and other corporate transactions, which underlines the versatility of the solution. We’ve lent to 27 businesses since last May and 40% by size have been transactions, including MBOs, MBIs and Private Equity sponsored acquisitions.

Can you tell readers about your background?

I previously worked at GE Capital and left in 2007 with colleagues to set up a private equity-backed business called Centric Commercial Finance. We grew that to a decent size, before selling it to Shawbrook Bank in 2014. I then joined Arbuthnot Latham in 2018.

How has your year been at Arbuthnot Latham?

It’s been great. I’m working with a close-knit and very experienced team. The bank was established in 1833 and has a very strong heritage.

We’re coming up to our first anniversary for the ABL division and our first year has been even better than we anticipated. We’re ahead of plan and ready to support more entrepreneurs from across the UK in growing their businesses and helping them to realise their ambitions.