Value department store group TJ Hughes has refinanced using an asset-based facility rather than conventional borrowing.

The deal, arranged from specialist financier Burdale through adviser Litmus, gives the 57-store retailer access to between £15m and £20m that will provide working capital, industry sources said.

They believed TJ Hughes’ decision to borrow against assets was indicative of traditional banks’ continuing unwillingness to lend to businesses on acceptable terms.

Asset-based deals are viewed with suspicion by some retailers, which associate such facilities with the demise of Woolworths - a link that angers the finance providers, which feel their involvement with the variety store group was misunderstood and unfairly represented.

There is no suggestion that TJ Hughes’ arrangement of an asset-based loan means other sources of financing were not available or that it is in difficulties.

One source said: “Asset-based lending is increasingly being used as a form of finance because debt is expensive and it’s possible to get better rates.”

Another viewed TJ Hughes’ decision as “pragmatic” and said: “Banks are being difficult. If you take an asset-based loan, it’s probably going to be an easier route.”

Alistair Lee, director of debt advisory business GGW, said: “There’s definitely a trend in retail and other sectors towards asset-based loans.”

He said benefits included preservation of cash flow and believed critics of such deals were misguided. “There are a lot of asset-based deals being written and few going wrong,” he said.

Owner Silverfleet attempted to sell TJ Hughes for £70m last year, but the process was abandoned after the asking price was not met. Last November, former Etam Group boss Beatrice Lafon took over as chief executive from Sue Tennant.

No comment was available from TJ Hughes, Burdale or Litmus.

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