SFNet’s Q2 2026 Asset-Based Lending Survey shows a sharp rebound in new commitments, improving bank credit performance and renewed optimism about demand—even as inflation, higher rates and geopolitical uncertainty complicate the outlook.

The asset-based lending market entered the second half of 2026 with considerably more momentum than it began the year. After a softer first quarter, new business accelerated sharply during Q2, commitments expanded among both banks and non-banks, and lender expectations for future demand strengthened. At the same time, portfolio performance among bank ABL lenders improved, suggesting that increased activity has not come at the expense of credit quality.

Those trends emerge from the Secured Finance Network’s Q2 2026 Asset-Based Lending Survey, compiled by Keybridge. Among banks, new commitments to new clients increased 58.7% from Q1, while non-bank lenders recorded a 60.9% increase. Bank net commitments swung from negative $510 million in Q1 to positive $2.81 billion in Q2, while non-bank net commitments also returned to positive territory.

That resurgence is occurring against a complicated economic backdrop. Economic growth has remained resilient beneath the headline numbers, but inflation, energy prices, tariffs, geopolitical uncertainty and higher long-term interest rates are creating new challenges for borrowers. For ABL, that combination may prove significant: a strong economy supports credit quality and borrower demand, while uncertainty and higher working-capital requirements can increase the appeal of collateral-based financing.

New Business Returns

Perhaps the most significant Q2 development was the rebound in originations. For bank respondents, total commitments increased 1.3% quarter over quarter, while outstandings increased 2.0%. On a year-over-year basis, commitments rose 2.9% and outstandings increased 4.8%. Recent bank respondents reported $366.9 billion of total commitments and $147.2 billion of outstandings.

Beneath those totals, the acceleration was more pronounced. New bank commitments to new clients surged 58.7% from Q1 and were 7.6% higher than Q2 2025. Commitment runoff increased just 3.4% sequentially and declined 14.1% from a year earlier. That pushed net commitments from negative $510 million in Q1 to positive $2.81 billion in Q2. Two-thirds of bank lenders reporting in both quarters experienced an increase in new commitments.

Outstandings followed a similar trajectory. New bank outstandings increased 22.7% sequentially and 17.8% year over year, while runoff was essentially unchanged from Q1. Net outstandings increased from $270 million in the first quarter to $860 million in Q2.

Non-bank lenders participated in the rebound as well. Total commitments increased 3.9% quarter over quarter, although outstandings declined 1.2%. New commitments to new clients jumped 60.9%, substantially outpacing the 12.7% increase in commitment runoff. Non-bank net commitments consequently returned to positive territory at approximately $181 million.

Taken together, the results suggest lenders were finding more opportunities to put capital to work by midyear.

Demand Becomes the Bigger Story

The survey’s confidence measures reinforce that conclusion. Bank lender sentiment improved four points to 59, while non-bank sentiment remained stronger at 65 despite slipping two points from Q1.

More telling were expectations for new business. The bank demand index increased eight points to 68, with 36% of respondents expecting demand to improve and none expecting it to decline. The non-bank demand index reached 83, with two-thirds expecting new-business demand to improve. Again, no respondents expected demand to weaken.

Several forces could support that outlook. Refinancing continues to contribute to activity, while inflation and higher input costs can increase working-capital requirements. Companies carrying more expensive inventory or larger nominal receivable balances may need additional financing even without substantial increases in unit volumes.

Economic uncertainty can also work in ABL’s favor. Borrowers concerned about future liquidity may place greater value on committed revolving capacity, while companies that fall outside conventional cash-flow underwriting parameters can turn to collateral-based structures. In that environment, ABL’s fundamental proposition—financing tied to identifiable working-capital assets—becomes particularly relevant.

Utilization Tells a More Nuanced Story

Stronger demand expectations have not yet translated into a broad surge in line utilization. Bank utilization increased 20 basis points to 40.1%, slightly above its nine-year historical average of 39.8%. Non-bank utilization moved in the opposite direction, declining 2.7 percentage points to 52.0% as commitments expanded while outstandings fell. Even after the decline, non-bank utilization remained above its 49.1% long-term average.

The gap between commitments and utilization is worth watching. Lenders are adding business and borrowers are securing capacity, but companies are not necessarily drawing aggressively against it.

Expectations also moderated. The bank utilization outlook fell nine points to 57, while the non-bank index dropped 24 points to 63. More than three-quarters of bank respondents expect utilization to remain unchanged during the next quarter. The result could be more new-client opportunities for lenders without an equivalent near-term increase in earning assets.

Bank Credit Metrics Improve

Credit quality provided another encouraging signal. Bank criticized and classified loans as a percentage of outstandings declined 80 basis points quarter over quarter. Non-accruals fell 56 basis points and gross write-offs declined eight basis points. Nearly three-fifths of bank respondents reported lower criticized and classified loans, while more than three-quarters reported either declining or unchanged non-accruals and gross write-offs.

Among long-term bank respondents, criticized and classified loans stood at approximately 10% of outstandings in Q2, down from levels above 16% during portions of 2024 and 2025. That suggests some borrower-specific problems are working their way through portfolios rather than developing into broad deterioration.

Non-bank results were more mixed. Criticized and classified loans increased in aggregate, although two-thirds of respondents reported no change. Non-accruals also rose, with 46% reporting an increase. Yet realized losses remained minimal: gross write-offs were 0.09% of outstandings.

A Resilient Economy, but Inflation Returns

The ABL improvement is occurring against an unusual macroeconomic backdrop. Real GDP expanded at a 1.5% annualized rate in Q2, but underlying activity was considerably stronger. Real final sales to private domestic purchasers accelerated to 4.2%, compared with 1.7% and 1.8% during the preceding two quarters. Consumer spending contributed 2.3 percentage points to Q2 growth, business investment remained robust—particularly investment associated with AI-related equipment—and unemployment stood at 4.1% in August.

For ABL lenders, that resilience matters. Healthy consumer activity supports retailers, wholesalers and manufacturers, while continued business investment supports inventory, equipment purchases and working-capital requirements.

Inflation, however, has reemerged as a complication. CPI rose 0.4% in August as geopolitical tensions and higher oil prices returned to the foreground. Energy prices, tariffs and trade restrictions, along with heavy investment demand associated with AI infrastructure, could add further price pressure. Longer-term Treasury yields have consequently risen as markets weigh inflation, federal borrowing requirements and competition for capital.

For borrowers, the hoped-for return to inexpensive capital may therefore take longer.

Why Inflation Cuts Both Ways for ABL

Persistent inflation presents a two-sided equation for asset-based lenders. Higher labor, energy, transportation and tariff costs can pressure borrower margins, particularly when companies cannot fully pass those increases through to customers. Elevated interest rates compound that pressure.

At the same time, inflation can increase working-capital needs. Companies paying more for inventory require additional dollars to finance essentially the same quantity of goods, while higher selling prices can increase receivable balances. For eligible assets, both can expand the collateral base supporting an ABL facility.

Tariffs add another dimension. Companies attempting to protect against future price increases or supply disruptions may carry more inventory, lengthening cash-conversion cycles and increasing financing requirements. Inflation can therefore weaken borrower margins while simultaneously increasing the nominal value of the assets against which they borrow—placing even greater importance on collateral monitoring, eligibility standards and borrower-level underwriting.

Banks and Non-Banks Prepare for More Activity

Neither bank nor non-bank lenders appear to be retreating. Bank expectations for employee headcount increased seven points to 73, with 45% expecting to add personnel and none expecting headcount to decline. The non-bank index stood at 63, with one-quarter anticipating growth and no respondents expecting reductions.

That willingness to invest in staff, combined with stronger demand expectations, suggests lenders are positioning for additional activity. Competition is likely to remain intense, particularly for stronger credits. Banks have capital to deploy, while non-bank lenders continue to compete through flexibility, speed and structures outside traditional bank parameters.

A Stronger Second Half, With Caveats

The Q2 survey does not point to an ABL boom. Instead, it depicts something potentially more sustainable: a market returning to growth while maintaining relatively healthy credit fundamentals.

New commitments rose sharply, net commitments turned positive and bank outstandings increased. Both bank and non-bank lenders expect demand to remain healthy. Bank credit metrics improved, while non-bank losses remained minimal despite some increase in problem credits.

There are reasons for caution. Utilization remains moderate. Inflation, energy and tariff costs threaten borrower margins. Long-term rates remain elevated, and geopolitical developments can change economic expectations quickly.

Yet those challenges may also reinforce ABL’s role. Companies confronting volatile input prices, uncertain supply chains and higher financing costs need liquidity and flexibility. Businesses with significant receivables and inventory possess assets capable of supporting that liquidity even when traditional cash-flow financing becomes more difficult.

That may be the most important message from Q2: new business is rising while portfolios remain relatively healthy.

Borrowers are confronting increasingly complex working-capital decisions, while lenders are reporting stronger demand for financing designed around those assets. Banks and non-banks remain prepared to meet that demand as companies seek liquidity and flexibility amid persistent inflation, elevated rates and economic uncertainty.

For ABL, uncertainty remains a risk to manage, but it may also be an increasingly important source of opportunity.

This article was written with the assistance of an AI tool.