The Key to Finding White Space in ABL

Finding White Space by Flipping Burgers: What Lenders Can Learn from Fast Food

Every few years the lending industry collectively declares that “spreads are tight,” “competition is irrational,” and “there’s no white space left.” And every few years, those same statements turn out to be both true and completely wrong.

True, because the raw economics of lending are remarkably similar across platforms. Wrong, because white space rarely comes from inventing a new ingredient. It comes from creative application of the same ingredients everyone else already has. If lenders want a master class in how to do this, they should look no further than the fast-food hamburger industry.

On the surface, the hamburger business is about as commoditized as it gets. Beef is beef. Buns are buns. Fries are potatoes in disguise. Coke is Coke. These items are purchased from the same distributors, at roughly the same prices, with little room for cost arbitrage. And yet McDonald’s, Burger King, In-N-Out, Shake Shack, Five Guys, and the latest wave of smash burger concepts all coexist, thrive, and occupy very different positions in the consumer’s mind.

Same inputs. Same cost of goods. Radically different outcomes.

Sound familiar?

Same Balance Sheet, Different Brand

Most asset-based and private credit lenders operate with nearly identical cost structures. Capital has a cost. Credit officers cost money. BDOs cost money. Field exams, appraisals, lawyers, and portfolio monitoring all come out of the same bucket. Margins, at least in theory, should converge.

Yet just like hamburgers, lenders don’t win or lose based on whether they bought cheaper beef. They win or lose based on how they assemble the meal.

McDonald’s didn’t become McDonald’s by having better ingredients. It became McDonald’s by mastering consistency, speed, process, and scale. Burger King leaned into customization - “have it your way” - long before personalization was a buzzword. In-N-Out made a virtue out of simplicity, limited menu, and cult-like focus. Shake Shack turned a burger into an experience and charged accordingly. Five Guys made abundance and transparency part of the value proposition. Smash burger concepts stripped the product down even further and leaned into texture, speed, and price point.

None of these strategies required a different cow.

Lending’s Burger Problem

In lending, we often pretend differentiation comes from pricing, leverage, or structures that look innovative right up until the next competitor matches them. That’s the equivalent of arguing over sesame seeds.

The real white space comes from choices lenders make about allocation, focus, and philosophy—not inputs.

Take people allocation. Most platforms reflexively overweight sales because originations feel like growth. But what if the white space is the opposite? What if the market opportunity is a lender that intentionally overinvests in credit, underwriting, and portfolio management, and underinvests in volume? That’s not a new product. It’s a new posture. That’s In-N-Out saying: “We don’t need 40 menu items. We need three done perfectly.

Similarly, some lenders chase enterprise value structures because it sounds sophisticated and equity-friendly. Others stick to collateral because liquidation math feels safer. Neither approach is inherently superior. But pretending you can be world-class at both is like trying to be Shake Shack and McDonald’s at the same time. One is experiential, brand-driven, and valuation-based. The other is operational, repeatable, and asset-centric.

White space often appears when a lender chooses what it will not do.

Product Is the Application, Not the Ingredient

Every hamburger chain uses beef. The differentiation comes from grind, cook method, portion size, and presentation. In lending, the equivalent isn’t the collateral—it’s how the collateral is used.

Fixed-asset lending, for example, is widely viewed as hard. Heavy appraisals. Slower processes. Lower perceived upside. And yet, for lenders willing to specialize deeply - knowing machinery, equipment resale markets, and liquidation paths better than anyone else - that “boring” product can become a high-return niche with less competition.

That’s Five Guys charging more for the same burger because they understand portion psychology and customer expectations.

On the other end of the spectrum, some lenders lean into enterprise value, sponsor relationships, and covenant-light structures. That’s Shake Shack—brand-driven, reputation-sensitive, and priced for experience. The risk profile is different, the talent required is different, and the failure modes are different.

The mistake is not choosing one over the other. The mistake is assuming that white space requires inventing a new burger altogether

Creative Constraint Beats Endless Optionality

Fast-food chains succeed by imposing constraints. Limited menus. Defined customer promises. Repeatable processes. Lending platforms, by contrast, often drift toward maximum optionality: “We can do ABL, cash flow, stretch senior, unitranche, second lien, sponsor, non-sponsor, small, large, fast, slow.

That sounds flexible. In practice, it’s undifferentiated.

White space frequently comes from saying, “We only lend where we can underwrite faster, monitor better, and exit cleaner than anyone else.” That decision informs hiring, compensation, systems, and culture. It determines whether a firm is sales-led or credit-led, opportunistic or dogmatic, volume-driven or outcome-driven.

McDonald’s doesn’t worry about whether it could theoretically make a great milkshake with artisanal ice cream. It worries about throughput.

Borrowers Notice, Even If Lenders Don’t

One of the great myths in lending is that borrowers only care about price. That’s like saying consumers only care about calories. If that were true, every burger joint would look the same.

Borrowers care about certainty of execution, speed, flexibility, communication, and whether a lender understands their business when things go sideways. Those attributes are the lending equivalent of atmosphere, service, and brand trust. They are built through focus, not financial engineering.

White space exists where borrowers feel misunderstood, underserved, or over-processed. And just like burgers, that space doesn’t require a new supply chain. It requires a new point of view.

Steal Shamelessly from Dissimilar Industries

The lending industry has a habit of benchmarking itself against…other lenders. That’s intellectually comfortable and strategically limiting. The hamburger industry shows us that differentiation thrives in mature, commoditized markets when firms study application, not ingredients.

The next wave of successful lenders won’t win because they discovered cheaper capital or invented a new fee. They’ll win because they made intentional choices about people, products, and philosophy and executed those choices relentlessly.

In other words, they’ll stop arguing about beef prices and start thinking about what kind of burger they’re actually serving.

And maybe, just maybe, they’ll realize that the white space was on the menu the whole time.

This article was first published on SFNet: https://www.sfnet.com/home/industry-data-publications/the-secured-lender/tsl-express-daily-articles-news/tsl-express-article-detail/the-key-to-finding-white-space-in-abl