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A financial asset-backed loan, also known as a loan-on-loan facility, warehouse credit line, or receivables-backed financing, is a funding option that allows non-bank financial institutions (NBFIs) to borrow using their loan receivables as collateral.
In the Philippines, many NBFIs such as digital lenders, financing companies, and SME-focused lenders do not have access to deposits like banks do. This type of loan helps them grow their portfolio by turning existing loans into immediate capital.
Banks evaluate the loan book of an NBFI and lend against its value. The NBFI continues collecting repayments from its borrowers, and those collections are used to repay the bank.
To proceed, banks typically assess:
Origination and underwriting processes
Portfolio performance, default rates, and repayment history
The reliability of internal controls and reporting systems
There are two common forms:
Term-Based Asset Backed Loan (ABL) – A fixed amount with a set maturity
Warehouse Facility – A revolving line used to fund ongoing disbursements
Accelerates loan book growth – NBFIs can deploy more loans without waiting for repayments or raising equity.
No hard collateral required – Receivables serve as the main security, making this accessible to asset-light lenders.
Boosts return on equity (ROE) – Leverage increases profit potential without diluting ownership.
Builds institutional track record – Securing a bank facility strengthens relationships with other lenders and investors.
Designed for SME lenders – This model fits lenders with recurring short-term loans, especially for MSMEs.
- Higher operational standards required – Only NBFIs with proper tracking systems and audited financials are usually eligible.
- Bank oversight on cash flow – Receivable payments may be routed through monitored accounts.
- Over-collateralization may apply – Banks often require a larger receivables pool than the amount they lend.
- Shorter tenors – Facilities typically range from 6 to 36 months depending on the asset structure.
A financial asset-backed loan is one of the most effective ways for NBFIs in the Philippines to grow their lending capacity without needing to raise new equity. It provides institutional funding that matches the pace of borrower demand and aligns with responsible credit expansion.
At Bayfront Capital Advisors, we help NBFIs structure and secure these facilities by working closely with local banks. Our deep experience with financial institutions ensures the funding is tailored, bankable, and built for long-term growth.
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