Asset-Based Lending Industry Statistics 2024: Trends, Growth, and Insights
Barry Elad
Updated · Nov 23, 2024
The asset-based lending (ABL) industry has been quietly reshaping the financial landscape, providing businesses with a reliable and flexible financing option. In the face of fluctuating markets and growing operational costs, companies have increasingly turned to asset-based lending to unlock capital tied up in physical and financial assets. This alternative lending model allows businesses to leverage their inventory, accounts receivable, and equipment to secure loans, facilitating growth even during periods of economic uncertainty. As we look into 2024, the ABL sector is poised for significant growth, driven by evolving market trends and technological innovations.
Editor’s Choice: Key Trends Driving the Industry
- ABL Market Size in the US is expected to reach $600 billion by the end of 2024, reflecting a steady growth rate of 5% year-on-year from 2023.
- The global asset-based lending market is projected to grow at a CAGR of 7.4% between 2024 and 2030, driven by increased demand for flexible financing solutions.
- In 2023, 60% of mid-sized companies in the US relied on asset-based lending for liquidity management, marking a sharp increase from 48% in 2022.
- Digital transformation in the ABL sector is accelerating, with over 75% of lenders adopting automation tools for risk assessment and loan management.
- Cross-border ABL transactions grew by 15% in 2023, with businesses seeking more diverse financing sources as global trade recovers.
- Healthcare and manufacturing remain the top sectors utilizing ABL, accounting for 35% of the total ABL market share.
- Rising interest rates are pushing companies to shift from traditional bank loans to ABL, with interest in this lending model increasing by 10% year-over-year.
Market Size and Growth Projections
- The US asset-based lending market is forecasted to hit $600 billion by Q4 2024, compared to $570 billion in 2023, showing a consistent upward trend.
- Global ABL market size reached $1.5 trillion in 2023, and this figure is expected to grow to $1.8 trillion by 2025.
- Small-to-medium enterprises (SMEs) are projected to account for 45% of ABL loans by 2024, as more businesses seek alternative financing due to stricter bank loan requirements.
- The European asset-based lending market is anticipated to grow at a CAGR of 6.3% from 2024 to 2030, with Germany and the UK being the largest contributors.
- In Asia-Pacific, the ABL sector is expected to expand rapidly, growing by 10% annually, as countries like China and India increasingly adopt ABL to support their manufacturing sectors.
- The demand for ABL in the construction industry surged by 12% in 2023, with projections for further growth as infrastructure projects multiply globally.
- Technology-driven lending platforms have captured 25% of new ABL clients in 2023, thanks to more streamlined application processes and real-time asset monitoring.
Asset-Based Lending Market Trends
- Automation in asset valuation is transforming ABL, with 85% of lenders in 2023 adopting digital tools to assess the value of accounts receivable, inventory, and equipment.
- Sustainability-linked loans are making their way into ABL, with 10% of total ABL loans in 2023 tied to environmental, social, and governance (ESG) goals. This figure is expected to double by 2025.
- The shift to non-bank lenders has accelerated, with non-bank financial institutions accounting for 30% of all ABL transactions in 2023, up from 25% in 2022.
- The retail sector has seen a 20% increase in ABL financing as businesses face supply chain disruptions and fluctuating consumer demand.
- ABL-backed mergers and acquisitions (M&A) deals surged by 14% in 2023, driven by companies using ABL to finance strategic expansions.
- Supply chain financing linked to ABL is expected to grow by 9% in 2024, particularly in manufacturing and wholesale sectors where inventory financing remains crucial.
- The use of blockchain in ABL for transparent and secure transactions is projected to rise, with 10% of lenders expected to implement blockchain technology by 2025.
Key Sectors Utilizing Asset-Based Lending
- The manufacturing sector leads ABL usage, representing 28% of the total market, driven by the need for working capital to manage inventory and production costs.
- Healthcare companies utilized 22% of total ABL loans in 2023, primarily to finance expansions and cope with increasing operational costs.
- Retail and wholesale sectors accounted for 19% of ABL loans in 2023, leveraging the flexibility of ABL to manage seasonal inventory fluctuations.
- Technology companies have shown an increasing interest in ABL, with 15% of tech firms using ABL loans to finance R&D and expansion into new markets.
- Construction companies saw a 12% increase in ABL financing in 2023 as they sought working capital to support infrastructure projects globally.
- The automotive sector is also turning to ABL, with 8% of loans going to auto manufacturers and suppliers in 2023 to finance parts and vehicle production.
- Agriculture and food processing companies are increasingly using ABL, making up 7% of the market, driven by the need for liquidity to manage supply chain disruptions and crop cycles.
Challenges and Risks Involved in Asset-Based Lending
- Rising interest rates have increased the cost of ABL financing, with interest rates on ABL loans climbing by 0.75% in 2023, making it more expensive for some businesses to borrow.
- Collateral valuation volatility remains a challenge, especially in sectors like retail and technology, where the value of inventory and equipment can fluctuate rapidly.
- Fraud risk continues to pose a threat, with 5% of ABL lenders reporting fraudulent claims in 2023, prompting a push for tighter verification processes.
- The complexity of cross-border ABL transactions has grown, with legal and regulatory differences across countries increasing the risk of disputes and delays.
- Underutilization of collateral is a concern, with 20% of businesses failing to fully leverage their available assets due to outdated or inaccurate asset tracking.
- Loan default risk in ABL remains high in certain sectors, such as retail, where 10% of ABL-backed companies defaulted on loans in 2023 due to declining sales.
- The growing reliance on digital tools and automation introduces cybersecurity risks, with 12% of lenders reporting data breaches in 2023, which could undermine the integrity of ABL processes.
Technological and Digital Innovations in ABL
- Artificial intelligence (AI) is being used by 65% of ABL lenders to enhance risk assessment and borrower creditworthiness evaluations, speeding up the loan approval process.
- Blockchain technology adoption in ABL is projected to grow by 15% by 2025, enabling greater transparency and security in asset tracking and verification.
- Automation tools for loan management have reduced operational costs by 25% for ABL lenders, streamlining everything from asset valuation to payment collection.
- The use of predictive analytics is increasing, with 40% of lenders relying on these tools to anticipate borrower defaults based on asset performance data.
- Smart contracts powered by blockchain are expected to manage 20% of ABL agreements by 2026, allowing for automatic enforcement of loan terms and conditions.
- Digital onboarding platforms have cut application processing times by 30%, enabling faster access to capital for businesses in need of liquidity.
- Real-time asset monitoring tools have been adopted by 55% of ABL lenders, providing up-to-the-minute valuations of collateral, which helps mitigate risks related to asset depreciation.
| Innovation | Adoption Rate |
| AI for Risk Assessment and Loan Approvals | 65% of ABL lenders |
| Automation Tools for Loan Management | 25% reduction in operational costs |
| Blockchain in ABL | 10% of lenders (2023); 15% by 2025 |
| Predictive Analytics in ABL | 40% of lenders |
| Digital Onboarding Platforms | 30% reduction in application time |
| Real-Time Asset Monitoring | 55% of lenders |
Geographical Market Insights
- The North American ABL market continues to dominate, accounting for 45% of the global market in 2023, driven by robust demand from sectors like manufacturing and healthcare.
- In Europe, the ABL market saw a growth rate of 6.3% in 2023, with the UK and Germany leading the way, contributing to over 60% of the continent’s total ABL volume.
- Asia-Pacific is the fastest-growing region for ABL, and it is expected to expand by 10% annually, with China, India, and South Korea seeing increased adoption in industries like technology and manufacturing.
- The Latin American ABL market grew by 5% in 2023, with Brazil and Mexico accounting for the bulk of ABL transactions, driven by the need for liquidity in export-heavy sectors.
- Africa is an emerging ABL market, with South Africa leading regional growth at 4% in 2023, as businesses in mining and agriculture turn to ABL for working capital solutions.
- Cross-border ABL transactions between Europe and North America increased by 12% in 2023, with companies seeking international financing solutions to mitigate risks associated with regional economic slowdowns.
- The Middle East has seen an 8% growth in ABL, particularly in the United Arab Emirates, where companies in oil and gas are increasingly turning to ABL to finance their operations.
| Region | Market Share/Growth Rate |
| North America | 45% of global market |
| Europe | 6.3% growth in 2023 |
| Asia-Pacific | 10% annual growth |
| Latin America | 5% growth |
| Africa | 4% growth |
| Middle East | 8% growth |
Top Impacting Factors
- Inflationary pressures are pushing more businesses toward ABL, as 20% of companies reported higher borrowing costs through traditional loans in 2023, making ABL a more attractive option.
- The rise of e-commerce and online retail has driven 10% of ABL transactions in the retail sector, with businesses using ABL to manage inventory fluctuations.
- Supply chain disruptions continue to affect sectors like manufacturing, leading to a 9% increase in ABL loans used for short-term liquidity solutions in 2023.
- Rising interest rates have made traditional bank loans less favorable, with ABL transactions increasing by 7% as businesses seek alternative financing solutions.
- Private equity involvement in ABL has surged, with 25% of ABL deals in 2023 involving private equity firms, which use ABL to finance leveraged buyouts and acquisitions.
- Regulatory changes in Europe are impacting ABL growth, with 5% of lenders reporting challenges related to compliance with new financial regulations, particularly around collateral valuation and cross-border lending.
- The trend of green financing is influencing the ABL market, as 15% of lenders offer sustainability-linked ABL loans, allowing companies to reduce their interest rates by meeting ESG targets.
| Factor | Impact |
| Inflation | 20% of companies reported higher borrowing costs |
| Supply Chain Disruptions | 9% increase in ABL loans for liquidity solutions |
| Private Equity Involvement | 25% of ABL deals involved private equity |
| Green Financing in ABL | 15% of lenders offer sustainability-linked loans |
| E-Commerce Impact on Retail ABL | 10% of ABL transactions in retail sector |
Recent Developments in Asset-Based Lending
- Technological advancements have led to the introduction of AI-powered underwriting platforms, which reduce human error and streamline loan approvals, adopted by 70% of major ABL lenders in 2023.
- Sustainability-linked ABL loans grew by 12% in 2023, as businesses are incentivized to meet environmental goals while accessing more favorable loan terms.
- ABL-backed M&A deals reached a record high, contributing to 25% of the total value of leveraged buyouts in 2023, signaling the increasing reliance on ABL for corporate restructuring and acquisitions.
- Cross-border ABL financing became more accessible in 2023, with 20% of lenders offering expanded services to support international trade, helping companies mitigate currency fluctuation risks.
- Lender consolidation is reshaping the ABL market, with 5 major players acquiring smaller, regional lenders, leading to enhanced service offerings and broader geographical reach.
- The rise of fintech in ABL has seen 30% of new entrants in the market being fintech companies, offering more accessible and tech-driven lending options to small businesses.
- Digital asset-based lending platforms captured 20% of the new ABL business in 2023, allowing for faster loan approvals and better borrower experiences through fully automated systems.
Conclusion
As we look toward 2024, the asset-based lending industry continues to thrive, evolving through digital innovations and responding to global economic shifts. From sustainability-linked loans to cross-border transactions, ABL has proven to be a versatile and resilient financing option for businesses of all sizes. The adoption of advanced technologies like AI, blockchain, and real-time asset monitoring is set to drive the industry further, making ABL more efficient, secure, and accessible. With the potential for substantial growth in both developed and emerging markets, ABL is poised to become an even more integral part of the global financial system in the years ahead.
Sources
Barry Elad
Barry Elad is a dedicated tech and finance enthusiast, passionate about making technology and fintech concepts accessible to everyone. He specializes in collecting key statistics and breaking down complex information, focusing on the benefits that software and financial tools bring to everyday life. Figuring out how software works and sharing its value with users is his favorite pastime. When he's not analyzing apps or programs, Barry enjoys creating healthy recipes, practicing yoga, meditating, and spending time in nature with his child. His mission is to simplify finance and tech insights to help people make informed decisions.
