Keys to maximizing borrowing capacity when expanding internationally: An asset-based lender’s perspective

The world is a much smaller place, and trading across borders is of greater necessity in order for companies to diversify and grow. Consequently, over the last 30 years, companies have been exporting into foreign markets or acquiring foreign subsidiaries at an accelerating rate, with the size of businesses looking to export getting smaller and smaller.

Companies expanding internationally for the first time and seeking capital can realize many benefits from working with an experienced international asset-based lender.

Benefits of one global credit facility

For companies acquiring an international subsidiary or expanding operations outside their home borders, a single global credit facility can provide several advantages. For one, structuring a single global credit facility can simplify the lending process, while also driving down capital costs due to one credit facility, one negotiation, and one credit agreement.

A global credit facility can also provide a company with a consolidated view of their liquidity around the globe. This can be incredibly useful for asset-based borrowers, as they gain an overarching view of their accounts receivable and inventory across the globe. And, with loans in multiple currencies managed in one place, such companies are often better equipped to hedge against foreign risks.

Structural considerations that can expand funding availability

Beyond the advantages of a single global credit facility, an experienced international lender can advise on certain approaches that will make the funding of a business easier. Such lenders are well versed in the complexities of secured lending laws in various foreign jurisdictions.

This knowledge can be particularly beneficial for ABL borrowers with operations in multiple countries. For example, we’ve worked with companies that have reaped the benefits of centralizing operations — such as invoicing, contracts and collections — in one jurisdiction, while centralizing inventory in another. Understanding which jurisdictions may be more “ABL-friendly” can make a significant difference in a company’s borrowing base and funding availability.

Additionally, how a company structures its bank accounts can’t be underestimated in terms of how it may impact its borrowing availability and operational efficiency.

So, asking the right questions up-front, such as “where do you buy and store your inventory” and “under which jurisdiction are your contracts held” can lead to structural changes that drive efficiency and greater access to capital.

Cross-border lending experience

In 2012, Wells Fargo Capital Finance acquired London-based Burdale Financial Limited. Through this acquisition, Wells Fargo Capital Finance gained a team with deep cross-border lending experience. This team now operates under the Wells Fargo Capital Finance (UK) Limited name, and currently manages a portfolio of over 90 multi-jurisdiction agented and syndicated credit facilities, managing credit exposure in a range of companies, including the UK, Ireland, Germany, the Netherlands, Switzerland, Australia, and more.