Asset-Based Lending Surges in Q2 2025 as Confidence Rises Despite Mixed Portfolios
The asset-based lending sector showed strong growth and cautious optimism in Q2 2025. New figures from SFNet's latest index reveal a sharp rise in new deals and lender confidence. Both bank and non-bank lenders reported improved sentiment, though portfolio performance remained uneven.
The latest Asset-Based Lending Index and Lender Confidence Index, published by SFNet, highlighted a surge in activity. Bank lenders saw new outstandings climb by 6.5%, while non-bank lenders experienced a dramatic 47.4% increase. Total commitments also grew, with banks up 1.1% and non-banks rising 5.2%.
Confidence among lenders strengthened in the second quarter. Bank lenders' combined sentiment score reached 56.5, staying in neutral territory. Non-bank lenders, however, scored 63.3, signalling cautious optimism. Portfolio performance told a mixed story. Banks reported higher non-accruals and write-offs, though criticized loans fell. Non-bank lenders faced similar challenges, with criticized loans and non-accruals rising, while write-offs held steady. Despite these inconsistencies, the overall industry outlook remained positive, driven by strong deal activity. The broader economic picture was less encouraging. U.S. GDP growth in Q2 relied heavily on a drop in imports, masking weaker underlying demand.
The asset-based lending market enters the second half of 2025 with momentum. New deal volumes and lender confidence have both risen sharply, particularly among non-bank institutions. Yet, uneven portfolio performance suggests ongoing challenges in credit quality.
