Navigating the Shifting Tides of Asset-Based Lending in 2024

In the dynamic world of asset-based lending, the winds of change are blowing. Recent buzz at industry conferences and in financial circles has been dominated by three key concerns: escalating worry over default rates, the decline in asset values, and an unmistakable spike in bankruptcies. Here at Asset Compliant Solutions (ACS), we’ve seen these conditions before. As difficult as they may have been, for us, the struggle has always led to innovation; for ourselves and for asset-based lenders and lease finance companies. This innovation has, in turn, prepared us not just for today’s challenges but helped us steer a course toward greater adaptability in the future. 

The Rising Concern Over Default Rates and Declining Asset Values

Not long ago, when asset values were at record highs and defaults were low, lenders enjoyed growing portfolios and bottom lines. Now, it’s impossible to ignore the growing unease surrounding default rates. Aggravating the issue, diminishing asset values are threatening lenders’ ability to convert recovered assets into cash. This unfortunate but predictable trend has emerged as a critical challenge for asset-based lenders, forcing them to reevaluate their risk management strategies. The question on everyone’s mind now is how to navigate these choppy waters, and whether or where they should consider seeking help.

At the core of this challenge are compliance concerns and risk management. In their haste to address faltering portfolios, some lenders may fall shy of meeting their risk management and compliance standards. But if they’re able to leverage analytics and in-market expertise, it’s possible to identify portfolio risks while they’re still manageable, improving the probability of positive, compliant outcomes. 

A Noteworthy Spike in Bankruptcies

Perhaps the most striking revelation from our recent discussions at the ELFA and NEFA conferences has been a surge in bankruptcies. This can be seen as a canary in the coal mine for the lending community, especially in light of rising interest rates and tightening credit. And while some lenders are fending off crises, others are finding and capitalizing on opportunity. 

Your company may be among the opportunists, many of which work with ACS – using our technological assets and deep insights to uncover risk and identify value. If, on the other hand, you are in or nearing crisis mode, your ability to arbitrage and address the greatest risks early can often be the key to weathering today’s storms. In circumstances like these, ACS’s asset management solutions offer a strategic advantage.

The Shifting Landscape and Lender Strategies

The changing dynamics of the lending landscape have prompted a reevaluation of lending strategies by some forward-thinking lenders. This shift is not just a response to challenges but a proactive stance toward reshaping the future of asset-based lending. ACS has always recognized the importance of staying ahead of the curve and is committed to guiding and supporting lenders in this strategic realignment.

Recently, Andrew Pace, ACS’s Chief Client Experience Officer, noted the significance of this shifting landscape. He highlighted how some lenders are responding to the challenges posed by default rates, declining asset values, and increased bankruptcies by recalibrating their businesses to get out ahead of emerging problems with systems and partnerships that allow them to better manage risk and stay on top of overall portfolio conditions. At ACS, we see first-hand every day the kind of positive results this approach can yield. 

The Crucial Importance of Adaptability and Strategic Thinking

In an industry where change is the only constant, adaptability and long-term strategic thinking really matter. Andrew Pace’s observations underscore this reality. The ability to pivot and innovate to succeed in the face of change distinguishes successful lenders. ACS is not merely a witness to this evolution but an active participant, driving innovation in the services it provides.

ACS’s always-evolving suite of services is carefully crafted to address the challenges asset-based lenders and lease finance companies are facing today and tomorrow. By visiting, lenders can discover how ACS’s innovative solutions in compliance and asset management can empower them to navigate today’s shifting tides more successfully.