Asset-based finance (ABF) is a specialized method of providing companies with working capital and term loans that use accounts receivable, inventory, machinery, equipment, or real estate as collateral. ABF include factoring, reverse factoring, invoice discounting, distributor finance, loans against receivables/inventory, purchase order finance, etc. With the significant constraints in traditional SME lending, ABF can be a powerful instrument to unlock SME finance potential. Particularly, ABF products—factoring (including reverse factoring), pre-shipment finance, distributor finance, secured revolving lines of credit, warehouse receipt finance, secured merchant cash advance, etc. - are an alternative way to extend credit to SMEs. As part of the supporting infrastructure, automated ABF solutions can also become a tool to address the low technological capacity of MSMEs, facilitate and streamline the supply of FIs through the risk management technique and visibility of the entire value chain. ABF solutions can also facilitate significant private sector investment in SME sector on a risk-mitigated basis. To increase access to finance for SMEs and ABF lending offering by FIs, the number of issues mentioned above need to be addressed. To address the market gaps IFC will be focused on i) supporting the regulators in creating conducive prudential regulations for ABF; ii) supporting the creation of the National ABF program in three countries; iii) designing, piloting and rolling out ABF products; and iv) supporting MSMEs capacity for using ABF products.