Asset-Based Lending Australia 2025: How It Works & Key Trends

Australian businesses are increasingly turning to asset-based lending (ABL) as a strategic way to unlock working capital and fund growth in a competitive economic climate. With new regulatory shifts in 2025, asset-based lending is more accessible, flexible, and nuanced than ever—making it a key tool for both SMEs and larger enterprises looking to scale without taking on excessive risk.

What is Asset-Based Lending—and Why is It Trending?

Asset-based lending lets businesses secure finance by leveraging their tangible assets—such as inventory, accounts receivable, equipment, or property—as collateral. Unlike traditional unsecured loans, the amount you can borrow is directly tied to the value of these assets, making it especially appealing for companies with strong balance sheets but limited cash flow.

• Invoice finance: Borrowing against unpaid invoices to smooth out cash flow.

• Inventory finance: Using stock or raw materials as security for a loan.

• Equipment finance: Leveraging machinery or vehicles to access capital.

ABL has surged in popularity in 2025 due to:

• Tighter credit conditions from traditional banks.

• Regulatory clarity after the Treasury Laws Amendment (Business Finance Modernisation) Act 2024 streamlined asset valuation rules and improved borrower protections.

• Rise of fintech lenders offering faster, tech-enabled approvals and more flexible terms.

How Asset-Based Lending Works in 2025

The process for securing asset-based lending in Australia has become faster and more transparent in 2025, largely thanks to digital platforms and updated legal frameworks. Here’s what businesses can expect:

• Asset Valuation: Lenders assess the current market value of your assets, often using real-time data feeds or independent appraisers.

• Advance Rate: Depending on the asset type, lenders may advance 70–90% of the asset’s value (e.g., 85% on invoices, 75% on inventory, 65% on specialised equipment).

• Loan Structure: Facilities can be revolving (borrow and repay as needed) or term-based. Interest rates in 2025 typically range from 7.5% to 11%, reflecting a modest rise after the RBA’s latest cash rate decisions.

• Monitoring and Covenants: Lenders may require periodic asset revaluations or set covenants to maintain the health of the loan.

For example, a Sydney-based manufacturer recently used asset-based lending to expand operations—securing a $2 million facility against accounts receivable and equipment, with funds accessed in under two weeks thanks to a fintech lender’s streamlined process.

Benefits, Risks, and What to Watch in 2025

Asset-based lending offers distinct advantages, but it’s not without its pitfalls. Here’s what Australian businesses need to weigh:

Pros:

  - Quick access to substantial funds without diluting equity.

  - Flexible borrowing limits that grow with your business assets.

  - Often less restrictive than unsecured loans, especially for asset-rich sectors like manufacturing, wholesale, and logistics.

Cons:

  - Risk of asset repossession if you default.

  - Ongoing compliance and monitoring requirements.

  - Valuation gaps—lenders may apply conservative values, limiting the total facility size.

Key 2025 Policy Updates:

• Open Data & E-Invoicing: Expanded use of open banking and mandatory e-invoicing for government suppliers is making invoice finance faster and more accurate.

• Personal Property Securities Register (PPSR): Streamlined digital registrations improve clarity around asset encumbrances and lender rights.

• Green Asset Incentives: New federal incentives are available for businesses using ABL to fund sustainable equipment or upgrades.

Is Asset-Based Lending Right for Your Business?

Whether you’re managing seasonal swings, funding a strategic acquisition, or simply want to boost liquidity without selling equity, asset-based lending is worth a closer look in 2025. The landscape is shifting—innovative lenders, regulatory clarity, and improved digital processes have made ABL more competitive and transparent than ever.

Before proceeding, review your asset register, understand your cash flow needs, and compare terms from multiple lenders—including banks and specialist fintechs. As always, the right fit depends on your sector, business goals, and appetite for risk.