Asset-based lending did not experience the dramatic first-quarter bump evident in the broader economy, but grow it did, and so did lenders’ confidence in the market, according to data released by the Secured Finance Network (SFNet).

The association surveyed 35 bank and non-bank asset-based lenders (ABLs) on key indicators for its quarterly Asset-Based Lending Index and SFNet Confidence Index.  

“While asset-based lending recorded modest growth in the first quarter compared with the nation’s 6.4 percent rise in GDP, lenders expressed greater confidence in four of the five indicators used to gauge market sentiment,” said SFNet CEO Richard D. Gumbrecht. “They understand asset-based lending is critical to finance and the economy, and they anticipate continued growth as the economy recovers.”

Select Survey Highlights

For banks, asset-based loan commitments (total committed credit lines) increased slightly (0.4 percent) from Q4 2020 to Q1 2021, or 2.3 percent compared with Q1 2020. Outstandings (total asset-based loans outstanding) rose 2.8 percent from Q4 2020. That represents a 36.4 percent decrease compared with Q1 2020. Gross write-offs as a percentage of outstanding loans dropped by three basis points from Q4 2020 – a historical in-quarter low – or 2.7 basis points compared with Q1 2020.

For non-bank lenders, Q1 2020 commitments grew 2.1 percent from Q4 2020, or 15.1 percent compared with Q1 2020. Total asset-based loans outstanding increased 11.2 percent from Q4 2020, or decreased 3.4 percent compared with Q1 2020. Survey results also indicated that new commitments decreased, returning to levels relatively consistent with most quarters since 2016.

Regarding their outlook for the ABL market, lenders were slightly more positive in Q1 compared with the previous quarter.  Confidence in four of the five indicators increased, for new business demand, client utilization, portfolio performance and general business conditions. However, bank ABLs were more reserved about hiring expectations than in Q4 2020 and non-bank ABL hiring expectations remained about the same.

For more publicly available information, visit SFNet’s Q1 2021 Asset-Based Lending Index. SFNet members have access to additional data and detailed reporting.

For a broader view of ABL trends and this industry, visit SFNet’s Annual Asset-Based Lending Industry Survey for 2020. The study noted that ABLs in recent times have benefited from a strong economy, low default rates, an abundance of complementary capital and easing regulatory hurdles. Historically, the ABL market has also been resilient during times of economic uncertainty.