From Collateral to Partnership: The WhiteHorse Capital Approach to ABFBy Alex Knowland and Brenden Gallinek

September, 10, 2026 – ABF. Whether it is investors touting the scale of the market opportunity or the risks prevalent in the space, this acronym has dominated market headlines recently. Asset-based finance (“ABF”), also referred to as asset-backed finance or specialty finance, refers to the extension of credit that is collateralized by either hard assets or secured by a diverse pool of receivables backed by contractual or predictable cash flow streams. Unlike traditional direct lending where investors look to creditworthiness through enterprise value and a company’s operating cash flows, ABF investments tie the ability to repay to the underlying asset value.

The US ABF market has grown substantially since the Great Financial Crisis, bolstered by the emergence of non-bank lenders taking market share from banks that withdrew in the face of increased regulation. Recent estimates suggest that the ABF market is approximately $5 to $6 trillion¹ (and growing). One 2024 report estimated that 5% of market share was captured by private credit funds.² Holding that distribution constant and applying a modest annual growth estimate of 5% to the broader ABF market (meaningfully below some public estimates)  we estimate nearly $50 billion in incremental opportunity over the next three years for private credit funds, which we believe to be a conservative assessment.³

We believe securitization issuance provides another useful indicator of growth across ABF. New investment continues to support ABF volumes, with rated US private and public ABS issuance topping $345B in 2025 and on pace to exceed that number in 2026.⁴

Within this broader market, WhiteHorse frames the investable universe across the following sub-sectors:

• Consumer Finance: Collateral pool consisting of consumer receivables, such as auto loans, credit cards, or unsecured consumer loans
• Commercial Finance: Collateral pool consisting of receivables from small and medium-sized businesses, such as small business loans, merchant cash advances, or factoring contracts
• Real Estate Lender Finance: Collateral pool consisting of a diverse set of residential and/or commercial mortgage loans or other real estate assets, such as residential transition loans, non-performing commercial loans, or performing residential mortgages
• Esoteric Asset Finance: Collateral pool consisting of esoteric assets with recurring cash flows, such as litigation finance receivables, insurance commission receivables, music royalties, or future cash flows from debt settlement enrollments
• Hard Asset Finance: Collateral pool secured by hard assets like aircraft or other equipment
• Fund Finance: Bespoke financing arrangements backed by the net asset value of investments of portfolios of private assets (e.g., private equity, credit, hedge fund, GP solutions, etc.)

We believe ABF investments present attractive opportunities to secure compelling returns with meaningful downside protection through the unwinding of assets. We find this asset class attractive as individual ABF transactions generally benefit from material periodic amortization across a diversified pool of secured or unsecured receivables, which typically reduces the risk profile over time. These characteristics present realization avenues that have generally been unavailable to traditional direct lending investment strategies. Further, opportunities across ABF sub-sectors – whether investing in a pool of litigation finance receivables, financing a stream of future insurance commissions, or structuring a NAV loan secured by a diverse pool of equity investments – provide an opportunity for uncorrelated return profiles.

But structuring an attractive deal isn’t just limited to constructing robust covenant packages and designing an appropriate borrowing base with supportable advance rates, concentration limits and eligibility criteria. Following an appropriate diligence process is paramount and should consist of a review of collateral performance, legal documentation and key contract diligence, market assessment and valuation analysis, and regulatory and compliance engagement. Investment discipline is the central tenet and has never been more top of mind given the recent proliferation of fraud, as seen with First Brands⁵ and Tricolor⁶.

On every deal we ask ourselves two questions. The first is the lender’s: what ensures we are adequately protected in a downside scenario? The second is the borrower’s: what does this platform need to grow and can we deliver it today and as it scales?

WhiteHorse thoughtfully approaches each deal with the above considerations in mind. Our upfront and ongoing diligence prioritizes securing critical structural enhancements: cash controls via DACAs on borrower collection accounts, ability to verify historical collateral trends through upfront and recurring audits, the application of appropriate custodial controls, and the engagement of backup servicers when applicable.

In our view, that discipline is not friction for our borrowers. On the contrary, it is what makes us a reliable counterparty and partner. In the face of an uncertain macroeconomic backdrop, borrowers want to know they have partnered with a lender who understands the collateral and the business behind it; one that can be dependable in good times and bad.

Investing across the ABF credit spectrum requires a differentiated skill set across sourcing, structuring, underwriting, and portfolio monitoring. At WhiteHorse Capital, a boots-on-the-ground sourcing approach is favored with broad outreach backed by deep relationships. Underwriting experience across sub-sectors provides for speed and certainty. Drawing on the collective knowledge base of the WhiteHorse platform and the sector-specific expertise of our broader team across healthcare, consumer, infrastructure, and other verticals further provides us with a competitive edge.

What we believe ultimately sets WhiteHorse apart is range. We structure to the collateral and to the borrower’s unique circumstances, sponsored or non-sponsored. We seek the ability to meet a platform wherever its needs sit in the capital stack, whether that be unitranche, FOLO, second lien, forward flow, or NAV/GP solutions. We believe one relationship can solve a sequence of problems, which is why we aim to be the solution for today’s needs, and earn the right to be the financing partner of choice for tomorrow’s. Backed by the broader WhiteHorse platform and its resources, we seek to offer what standalone specialty lenders oftentimes cannot: permanence.