Structuring a £1m to £5m invoice finance facility
Corporate facility structuring
Asset-Based Lending
Expand the borrowing base by leveraging inventory, machinery, and property alongside the debtor book.
Asset-driven covenants
Facilities are closely tied to asset performance and collateral value, which can offer different covenant structures compared to traditional term debt.
Credit insurance
Facilities are often wrapped with whole-turnover credit insurance to mitigate catastrophic debtor insolvency risk.
Beyond the basic ledger: Asset-Based Lending (ABL)
When funding requirements exceed £1m, businesses often possess substantial assets beyond their sales ledger. Corporate lenders structure hybrid ABL facilities to maximize liquidity.
- Receivables (Invoice Discounting): Funding advanced against the eligible debtor book, typically up to 85-90%.
- Inventory Finance: Advancing funds against finished goods or raw materials held in secure warehousing.
- Plant and Machinery: Releasing capital locked in heavy equipment via refinancing.
- Property: Structuring term loans against commercial real estate.
By blending these assets, corporations can often achieve a higher overall quantum of funding tailored to their operational needs.
Complexities of execution
Intense due diligence
The underwriting process involves deep dive field audits, inventory appraisals, and legal reviews of major client contracts.
Syndication risk
For very large facilities, the primary lender may syndicate the risk with other institutions, increasing legal and administrative complexity.
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Frequently asked questions
Common questions from UK businesses about £1m - £5m facilities.
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