As we reach the midpoint of 2025, it’s an ideal moment for Asset-Based Lenders (ABL) to reflect on industry momentum, emerging risks, and areas of growth. Here’s what matters most right now.
1. Private Credit Keeps Gaining Ground
Private credit, and ABL in particular, remains on a strong growth trajectory. According to recent analysis by Wellington Management, private credit opportunities now exceed $30 trillion, driven by banks pulling back from leveraged and asset-backed lending. Moody’s also estimates the private credit market has grown to $3 trillion, accelerated by tighter bank capital rules and growing investor appetite.
2. Banks & Non-Banks: A Strategic Shift
While regulation is reshaping the role of banks in direct lending, many are still deeply involved in the market—now acting as originators, syndicators, and partners to non-bank lenders. The Financial Times recently noted that non-bank lending through structures like ABL is “unstoppable” as banks face constraints under Basel III endgame reforms. This partnership model creates new opportunities for ABL providers to tap capital, share risk, and reach borrowers that fall just outside traditional bank criteria.
3. Mid-Year Risk & Portfolio Review
With high interest rates and global uncertainty, now is the time for lenders to reassess:
- Borrowing base health and collateral valuations
- Portfolio risk exposure and covenant compliance
- Securitization or participation opportunities for risk distribution
Resources like SFNet’s Quarterly ABL Index offer benchmarking data to guide decision-making.
4. Tech Adoption & Efficiency
More ABL firms are exploring digital solutions to reduce workload and streamline the credit approval process. Some of the key areas that are making a big impact include:
- Borrowing base automation
- Digital documentation, including term sheet automation even with complex deals
- Predictive monitoring using AI and real-time metrics
- Automated spreading of financials
- Automated accounts receivable and accounts payable aging
- Credit Memo or credit sanction report automation
- Customized Scorecards
These tools not only reduce risk but create competitive differentiation for lenders targeting middle-market borrowers and make the credit approval process more streamlined. Specialized technology for asset-based lenders to streamline the lending process is now more important than ever.
Final Thoughts
Mid-2025 is more than a checkpoint—it’s a strategic inflection point. Lenders who understand macro trends, adopt technology, and anticipate changes in the market will be positioned to thrive in a fast-evolving ABL landscape.
Don’t miss our next article, Sector Watch: ABL Opportunities in Manufacturing, Transportation, and Staffing
