Why Banks Pulling Back Is Factoring's Biggest Tailwind in 2026
By Zolvo Team · 7 min read
The most important development for factoring and asset-based lending in 2026 is not happening inside the industry. It is happening at the banks. As commercial banks tighten their lending standards and pull back from cash-flow credit, the borrowers they turn away are landing with asset-based and non-bank lenders. For factors, that is the largest demand tailwind in years, and it comes with a catch.
This article lays out the shift, the numbers behind it, and why capturing the opportunity is an operational question, not a marketing one.
The shift: banks are handing over the middle market
The Federal Reserve's senior loan officer survey has shown banks, on balance, tightening commercial-and-industrial lending standards while demand holds roughly flat. With core inflation still above target and short-term rates elevated, banks are increasingly underwriting to collateral rather than to projected earnings, and turning away borrowers that no longer fit a cash-flow box. Those borrowers do not stop needing working capital. They move to lenders who underwrite the asset: factors and asset-based lenders.
The numbers
- Factoring is growing. The Secured Finance Network's year-end survey put factoring volume up 16.6 percent year over year, with both US and international activity contributing.
- Globally, a record. FCI reported the global factoring industry passed 4 trillion euros, with the Americas the fastest-growing region at roughly 20 percent and the US up more than a third.
- A refinancing wave is coming. Roughly a trillion dollars of US corporate debt is set to mature between 2026 and 2028, much of it needing to be refinanced into a higher-rate market where banks are cautious and collateral-backed structures are well positioned.
Banks retreating from cash-flow lending is the single biggest structural tailwind the factoring and ABL industry has had in years. The demand is arriving. The only question is who is operationally ready to take it.
The catch: more volume, more risk
A borrower a bank just declined is, by selection, a borrower who needs more scrutiny, not less. More volume from a tighter bank channel means more files to underwrite, more invoices to verify, and more collateral to monitor, at exactly the moment fraud is getting more sophisticated. The year's marquee credit failures, where leverage was hidden and collateral was pledged more than once, are a reminder that in collateral-backed lending the quality of the verification is the quality of the loan. Growth without operational discipline is just a faster way to book bad assets.
Why the constraint is operational, not demand
This is the part most lenders underestimate. The limit on how much of this wave a factor can capture is not how many deals it can find. It is how many it can verify, fund, reconcile, and monitor without the back office buckling. As one industry analysis put it bluntly, the binding constraint on ABL growth is monitoring capacity, not demand. The lender that can verify every invoice, apply cash accurately, and keep borrowing bases current without adding a person per borrower is the lender that takes share on sound terms. The one that cannot will either turn away good business or take it and lose control of the book.
What to do now
The move is to build operational capacity ahead of the volume, not after it arrives. That means automating the three functions that otherwise cap growth: invoice verification, cash application, and borrowing base monitoring. Each one, done by hand, scales with headcount. Each one, automated, scales with software, which is the only way to meet a double-digit demand surge without a proportional cost surge.
Zolvo builds that operational capacity for commercial lenders. See how invoice verification and portfolio monitoring scale without headcount, why fraud discipline matters more as volume rises, and how we support asset-based lending and private credit operations. For the ongoing view, read our take on the forces shaking middle market lenders.