Rick Warburton, the managing partner of Yorkshire Bank's Tees Valley Financial Solutions Centre, discusses asset-based lending as an alternative form of funding for small and medium-sized enterprises (SMEs)

WHETHER it be getting on to the property ladder, paying off debts, or buying a car, young adults seem to have tapped into the most generous of financial institutions with relative ease.

Whether parents act a guarantors or offer up cash, more often than not these "loans"

are interest-free - or sometimes not expected to be repaid!

However, for SME owners trying to access funds for their business, the "Bank of Mum and Dad" is rarely an option.

Most business owners know that there are certain times throughout the life of their business when they need additional funding and business support, and for a variety of reasons - the good and not so good. Increased customer demand can make expansion necessary or late debtor payments can result in cashflow becoming stifled. Whatever the reason, sometimes a cash injection is a necessity to keep the business on the right track.

Loans, overdrafts, equity finance and grant schemes are all well-known forms of financing a business. But what about using the value locked up in the business? Most businesses hold significant value - in terms of both the assets on the balance sheet and their underlying enterprise value.

Asset-based lending (ABL) has shaken off the stigma that was once associated with using a company's assets to get cash, to become one of the most popular forms of financing.

In short, ABL is any kind of lending that is secured by assets within the business.

This has traditionally included things such as plant and machinery, vehicles, cash tied up in the sales ledger and the value of stock. However, the competitive nature of the market has seen lenders continually look for an "edge" and lenders are increasingly considering things such as intellectual property.

So when thinking about funding options, consider ABL as it can provide finance solutions to many issues affecting growing businesses - from refinancing and relocation to management buy-outs and management buy-ins - and when used in conjunction with the more traditional forms of financing, is more than capable of adapting to the demands and requirements of today's businesses.