The Secured Finance Network (SFNet) recently released its Q2/25 Asset-Based Lending Index and Lender Confidence Index, offering a snapshot of how the industry has rebounded after a first quarter riddled with tariff challenges while offering a safe haven amid broader market volatility.
According to the Q2 survey, conducted between late July and mid-August, both bank and non-bank lenders saw lender confidence surge. For banks, the combined sentiment score rose 7.4 points to 56.5, but stayed in the neutral territory, hinting that banks anticipate conditions to remain the same next quarter. For non-banks, the combined score rose into slightly positive territory, up 10.8 points to 63.3, illustrating cautious optimism for near-term improvement.
“The topline U.S. GDP figure of +3.3% growth in Q2 may seem robust, but deeper analysis reveals fragility beneath the surface. The bulk of growth was driven by a collapse in imports (following a tariff-driven surge in Q1), which mechanically boosts GDP in accounting terms,” Rich Gumbrecht, CEO of SFNet, said. “When stripping out volatile trade and inventory components, final sales to private domestic purchasers grew by just 1.9%, highlighting underlying demand weakness. Risks tied to tariffs, inflation and Fed policy remain, but ABL appears to be on strong footing to meet evolving borrower needs, especially as refinancing demand rises and non-bank lending grows more competitive.”
Q2/25 was a strong one for banks and non-banks:
- Total commitments for banks rose 1.1%; total commitments for non-banks jumped 5.2%.
- New outstandings for banks rose 6.5%; new outstandings for non-banks soared 47.4%. (“New outstandings” refers to new amounts of money that a borrower has drawn or borrowed under the ABL facility during a specific period.)
Bank portfolio performance was mixed in Q2/25. Non-accruals rose, write-offs edged higher, but remained within its historical range and criticized loans – which have elevated credit risk – edged down 9 basis points. The decline in criticized loans among banks suggests a normalization trend, where previously stressed borrowers have improved their financial condition or exited their portfolios.
Non-bank portfolio performance was similarly uneven. Criticized loans and non-accruals climbed higher and write-offs held steady and were nearly flat as a share of outstandings. Non-bank lenders’ steadier write-off rates demonstrate tighter underwriting and a more selective approach to new origination.
“Despite broader economic challenges, the asset-based lending industry is healthy and optimistic,” Gumbrecht said. “We’re seeing a surge in new deal activity, stronger renewal cycles, and stable portfolio performance, all of which position the industry to meet growing demand through the remainder of the year.”
