By Armineh Baghoomian, Max Penel, and Richard Osborne at Partners for Growth
Companies come in all shapes and sizes—as do their growth journeys. Yet too often, traditional debt solutions take a one-size-fits-all approach to financing that doesn’t leave room for flexibility. For founders whose business models don’t fit in a traditional lending box—particularly those building asset-intensive platforms such as fintech lenders, digital marketplaces or inventory-heavy businesses—that rigidity can be a real constraint. The result is often an inefficient capital structure that forces them to take on more capital than they immediately need, pay interest on idle funds or face amortization schedules that don’t match their incoming cash flows.
Asset-backed lending structures, particularly warehouse facilities, can offer a more tailored and scalable solution for asset-heavy businesses. Rather than relying on rigid, lump-sum financing, these structures allow companies to draw capital in line with asset growth, improving capital efficiency and reducing the disconnect between assets and liabilities..
What is a warehouse structure?
A warehouse facility is a type of structured, asset-based financing that lets businesses borrow against a pool of financial or physical assets—such as loans, leases, trade receivables, inventory, or vehicles. It’s a flexible option that can support a wide range of asset-heavy businesses, whether they’re extending credit, managing receivables, or purchasing inventory and equipment. Rather than drawing a lump sum upfront, companies access capital incrementally, based on the value, quality, and performance of the assets they’re building.
The structure starts with a close look at how a company originates, underwrites and manages its assets. Lenders evaluate asset quality, underwriting or sales practices, and risk controls to shape a borrowing formula. Lenders use this formula to advance a percentage—often between 70% and 90%—of the value of a pool of eligible assets, subject to performance thresholds, concentration limits, and eligibility criteria.
Lenders evaluate borrowing and asset eligibility using a framework that reflects a company’s product, underwriting approach and historical asset performance and risk. For example, a business that originates consumer loans may have its own criteria for what qualifies as a high-quality borrower. The lender may start with that definition, than apply additional layers—factoring in credit risk, asset performance, concentrations, or other relevant risk metrics. The result is a flexible funding structure that grows with the business, aligns with cash flow, and reflects how the company operates and manages risk.
These structures typically fall into one of two categories: On-balance sheet facilities and Off-balance sheet (SPV) structures. Here’s how the two structures compare:
| On-Balance Sheet Facility | Off-Balance Sheet SPV Structure | |
| Who owns the assets? | Operating company | Special Purpose Vehicle (SPV) |
| Security interest | Direct lien over company-owned assets | Lender holds over SPV assets |
| Risk isolation | Lower—assets remain exposed to operating company risk. | Higher—assets are ring-fenced from operating company risk |
| Implementation | Simpler setup, fewer reporting requirements | More complex setup, structured for scale and investor transparency |
| Best fit for | Earlier-stage businesses or those in less complex environments | Mature or fast-scaling companies; more common in institutional deals |
| Investor preference | Somewhat less attractive to banks and institutional lenders | Highly attractive to banks, private credit funds, institutional investors and securitization-ready facilities |
Why Use a Warehouse Structure?
For asset-heavy businesses—fintech or otherwise—warehouse structures offer multiple advantages over traditional credit solutions:
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- Borrowing flexibility and improved capital efficiency: Unlike term loans that require large upfront draws, warehouse facilities enable incremental borrowings tied to asset growth. Capital is drawn as new assets are originated or acquired, meaning borrowers only pay interest on capital they are actively deploying. This avoids over-leveraging, reduces negative carry and ultimately improves capital efficiency without hampering growth.
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- Improved asset-liability matching: Warehouse structures are typically designed to amortize in line with the cash flows of the underlying asset pool. This self-liquidating structure minimizes asset-liability duration mismatches and provides a more natural alignment between funding obligations and asset cashflows, enhancing liquidity and reducing refinancing risk.
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- Less dilution, more control: As an alternative to borrowing money, companies might opt for equity funding. While that might be the right fit for early-stage growth, it can quickly become expensive for asset-heavy models, heavily eroding ownership if used as the primary method to scale loan books or asset bases. Warehouse facilities let businesses access the capital they need to scale without giving up more of the company.
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- Scalable with asset growth: Unlike fixed-term loans or capped lines of credit—which often require refinancing as businesses grow—warehouse facilities are designed to scale alongside a company’s asset base. As performance improves and asset volume increases, the facility can be upsized without the need for full refinancing.
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- Faster deployment: For platforms operating in fast-moving markets—such as embedded finance, BNPL, or SME lending—speed is everything. A warehouse facility provides ready liquidity, allowing originators to respond quickly to market demand and improve customer fulfillment timelines—without waiting on equity or term loan funding rounds.
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- Increased investor confidence: Warehouse facilities bring structure, transparency and discipline. The detailed reporting and ongoing monitoring give external investors—both debt and equity—more confidence in asset performance and the borrower’s operational and financial discipline.
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- A stepping stone to institutional capital: Global banks like JPMorgan Chase and Citibank are more likely to offer large-scale facilities once a business has proven its ability to manage a warehouse structure, including its reporting and data tracking requirements.
Case Study: Syarah
Founded in 2015, Syarah is a Saudi-based e-commerce platform that allows customers to purchase new and used vehicles online, with direct-to-door delivery. As the company set out to triple its fleet size and explore new markets, it partnered with PFG to implement a warehouse facility. The structure enabled Syarah to finance both used and new inventory through a borrowing base tied to eligible vehicles. Rather than relying on equity or term loans, the company gained access to flexible, draw-as-needed funding aligned with its asset acquisition cycle. As Syarah scales up its sourcing volume, expands margins, and considers geographic growth, the facility has provided a capital foundation built for long-term scalability.
Case Study: Tabby
Tabby, a Dubai-based buy-now-pay-later platform, used a warehouse facility to help them scale. The company needed to pay merchants upfront while collecting installments over time—a mismatch that a traditional term loan couldn’t solve. Instead, Tabby secured a facility that expanded from $50 million to $350 million, eventually attracting a $1.2 billion institutional line from JPMorgan. Additional support from Citibank and PFG financed new regions and product lines.
Choosing the Right Warehouse Lending Partner
Warehouse lenders that add the most value go beyond funding—they help companies mature their financial operations, implement institutional reporting standards, and position themselves for future rounds of scaled financing. Selecting the right lending partner is critical, especially for early-stage or scaling asset-backed businesses. The ideal partner provides not just funding, but also the expertise, flexibility, and long-term alignment required to help a business grow sustainably.
When evaluating a warehouse lending partner, several factors signal a strong fit.
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- Alignment: Lenders play a critical role in a company’s growth, which makes strategic alignment essential. A strong partner will demonstrate a deep understanding of the company’s business model—across underwriting practices, asset type and target market. Equally important is the ability to scale: a facility that starts small must have room to grow, often expanding from $5 million to $100 million or more as the company gains traction. In other woreds, the right lender isn’t just a short-term fix, but a growth partner.
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- Flexibility: No two asset-backed businesses are alike. A strong warehouse partner should offer structural flexibility—customizing advance rates, triggers, and covenants to fit the company’s unique asset profile and growth strategy. Off-the-shelf structures often fail to meet the needs of these types of dynamic, fast-growing businesses.
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- Reputation: A proven track record across markets and asset classes signals a lender’s ability to navigate complexity and support scale. Just as crucial is financial readiness and funding certainty—a strong partner should have committed capital available to deploy, not just a term sheet tied to pending fundraising.
Risks of the Wrong Partner
Working with an inexperienced, undercapitalized or unaligned partner can undermine a company’s growth and success. In emerging markets especially, founders have faced situations where a lender backs out after term sheets are signed, leaving companies scrambling for last-minute solutions. Others take on mismatched structures—like term loans—only to find themselves paying for unused capital that can’t scale. In worst cases, businesses take on expensive stopgap loans that can be predatory and erode margins and stall momentum.
Choosing a lender is a high-stakes decision. Before committing, it’s essential to ask the right questions. What experience does the lender have with the stage of business, the region and the asset class? How large can their facility scale? Have they structured similar deals, and can they provide references? The right partner won’t just understand the business today—they’ll have the expertise and capacity to grow with it over time.
Final Thoughts
Warehouse lending structures are a powerful way for asset-heavy businesses to scale flexibly, preserve ownership, and position themselves for long-term success. With the right partner and structure, companies can unlock sustainable long-term growth, without the burden of excess debt or dilution.
