The State of Asset-Based Lending: 2026 Review & 2027 Outlook
Refinancing, private-credit pressures, distressed opportunities, and evolving lender strategies are reshaping the Asset-Based Lending market heading into 2027.
Written by Don Cook, ABL Executive Recruiter | Commercial Banking & Commercial Finance practice | 5-minute read
A Market in Transition
The U.S. asset-based lending market enters 2027 with strong underlying demand, even as new transaction activity remains uneven.
Existing ABL borrowers are drawing more heavily on facilities, while refinancing requirements, working-capital needs, and credit pressures continue to create opportunities. At the same time, stress in parts of the private-credit market is prompting some borrowers to reconsider their financing structures.
The result is a market evolving beyond traditional working-capital lending, with refinancing, restructuring, and alternative financing solutions becoming increasingly important.
As the ABL market becomes more complex, the demand for experienced talent is likely to follow. Growth in refinancing, restructuring, distressed ABL, and more sophisticated collateral structures requires professionals who can do more than manage traditional lending relationships. Lenders need people who understand complex credits, can evaluate collateral effectively, navigate challenging situations, and build strong relationships with borrowers and sponsors. At the same time, the continued growth of non-bank ABL and greater use of technology and AI are creating new opportunities for professionals who can combine technical expertise with adaptability.
For firms competing for ABL talent, the challenge may not simply be finding experienced lenders — it will be finding the right people to navigate an increasingly nuanced market.
Where the ABL Market Stands in 2026
The first half of 2026 showed a clear split: utilization and outstanding balances increased, while new-client activity slowed.
SFNet’s Q1 2026 survey reported:
- Bank ABL commitments: approximately $359.3B
- Bank outstandings: $143.2B
- Bank utilization: 38.4%
- Non-bank utilization: 54.6%
- Bank outstandings: +8.7% QoQ
- Non-bank outstandings: +5.7%
- Bank new-client commitments: down nearly 50%
- Non-bank new-client commitments: down nearly 74% QoQ
The takeaway: financing needs remain strong even as borrowers have been more cautious about pursuing major new financing. That dynamic could shift as maturities, working-capital requirements, and credit deterioration create additional demand.
Q2 Showed Signs of a Thaw
Q2 2026 brought signs that transaction activity was beginning to pick up. SFNet reported 224 secured-finance transactions, with more than 100 lending organizations participating. Non-banks accounted for 76.8% of lender participations, compared with 23.2% for banks.
The quarter points to three overlapping areas of ABL activity:
- Traditional working-capital ABL
- Refinancing and restructuring ABL
- ABL replacing or supplementing cash-flow and private-credit financing
That third category could become particularly significant in 2027.
ABL and the Private-Credit Shift
One of the most important structural developments is the changing relationship between ABL and private credit.
U.S. direct-lending volume fell 55% QoQ in Q2 2026 to approximately $33.6B, while private-credit funds continued to raise substantial capital. An analysis of 44 BDCs also showed fair value-to-cost declining from 99.25% at year-end 2025 to 97.57% at mid-year 2026, while non-accruals increased from 2.5% to 3.4%.
For some companies, ABL may offer an alternative because financing capacity can be based on identifiable collateral — accounts receivable, inventory, equipment, real estate, and other assets — rather than solely on cash flow.
Blackstone’s midyear 2026 report estimated the broader U.S. asset-based finance market at approximately $30T. That figure encompasses a much broader market than traditional middle-market ABL, but it illustrates the scale of the collateral-finance opportunity.
The Refinancing Opportunity
Refinancing could be one of the largest drivers of ABL activity heading into 2027.
According to SFNet/LSEG data, approximately $130B, or 36% of current ABL commitments, was scheduled to mature during 2026–2027, including roughly $45B in 2026 alone.
Unlike M&A-driven activity, refinancing demand does not depend on booming deal volume or strong equity markets.
Maturities create a built-in financing need.
That makes refinancing a potentially durable source of ABL transactions heading into 2027.
Bank vs. Non-Bank ABL
Banks continue to offer:
- Low-cost deposits and lower cost of capital
- Existing relationship banking and treasury services
- Revolvers and term loans
- Capacity for larger syndicated transactions
- Cross-selling opportunities
The Federal Reserve’s July 2026 Senior Loan Officer Opinion Survey indicated generally unchanged C&I lending standards, stronger demand from large and middle-market companies, and generally easier C&I terms than the prior year.
Non-banks continue to differentiate through:
- Speed and flexibility
- Higher advance rates in certain situations
- Greater willingness to finance weaker credits
- Complex collateral expertise
- Turnaround and distressed-credit experience
- Smaller or highly structured transactions
SFNet’s Q1 confidence readings also showed stronger sentiment among non-banks, at 67 versus 55 for banks.
Club Deals Could Become More Important
ABL club transactions are another area to watch in 2027, particularly for facilities in the $50M–$100M+ range.
Multiple lenders can participate when a facility is too large for one regional or specialty lender’s risk appetite. As transaction sizes increase and lenders manage concentration risk, club structures could become increasingly useful.
Distressed ABL Opportunities
Several factors could create additional demand for distressed and turnaround ABL:
- Higher interest expense
- Refinancing requirements
- Private-credit portfolio stress
- Weaker companies from the 2020–2022 borrowing cycle
- Elevated inventory
- Margin compression
- M&A financing requirements
Not every financially pressured borrower will become distressed. But refinancing needs and higher financing costs could create opportunities for lenders with the expertise and flexibility to structure challenging credits.
Credit Quality Outlook
Higher risk than 2024–2025, but still manageable.
The Fed’s July survey showed C&I lending standards easing compared with 2025 and demand strengthening among middle-market companies. Still, private-credit stress and higher financing costs reinforce the need for disciplined underwriting and active portfolio management.
Areas to watch include:
Fraud • Borrowing-base manipulation • Inventory overvaluation • Customer concentration • Margin deterioration • Tariffs • Refinancing risk • Sponsor liquidity • Management quality • Excessive leverage
Recent corporate failures also reinforce the importance of field exams, collateral monitoring, and ongoing portfolio oversight.
Technology & AI in ABL
AI and other technology tools could increasingly support:
- Borrowing-base and A/R aging analysis
- Customer-concentration monitoring
- Fraud detection
- Field-exam preparation
- Inventory analytics
- Covenant monitoring
- Early-warning systems
- Cash-flow forecasting
- Exception reporting
The opportunity is not necessarily to replace ABL expertise, but to analyze information faster, identify exceptions earlier, and give professionals more time for higher-value decisions.
2027 Outlook
Based on SFNet activity, the refinancing pipeline, bank lending trends, private-credit conditions, and the broader market environment, we estimate:
| Metric | 2027 Outlook |
| ABL commitments | +5% to +10% |
| ABL outstandings | +7% to +12% |
| New transaction volume | +10% to +20% |
| Refinancing volume | +15% to +25% |
| Non-bank ABL | +10% to +15% |
| Distressed/turnaround ABL | +15% to +25% |
| ABL employment | +5% to +10% |
These are estimates, not published industry forecasts. They reflect current market data and trends, including SFNet activity, the refinancing pipeline, bank lending conditions, private-credit performance, and the broader economic outlook.
What to Watch in 2027
ABL enters 2027 with a substantial refinancing pipeline, evolving private-credit conditions, and continued demand for flexible capital.
The opportunity may extend beyond traditional ABL growth. Refinancing, restructuring, complex collateral, and alternative financing solutions could become just as important as new-client activity.
For lenders, that means the market may increasingly reward expertise in navigating complexity — making the right talent an important part of the equation.