Asset-Based Finance Growth Putting Banks to Shame

The rise in the level of support being given by the asset-based finance industry continues to put the banks to shame.

According to the Asset Based Finance Association (ABFA) in the three months to the quarter ended June 2014 asset-based funders (comprising of invoice finance and asset finance providers) lent out a record £18.9 billion to UK businesses.

The figures from the ABFA reveal that the combined amount of invoice finance and asset based lending provided to businesses grew by 7% in the last quarter, from £17.7 billion in March 2014, and 10% in the last year, from £17.3 billion in June 2013.

The ABFA puts the growth down to constraints on traditional lending as well as greater awareness and understanding amongst businesses as to how borrowing against the value of their invoices and other assets can free up cash to invest in growth.

The ABFA reported that 80% of asset based finance is invoice finance, in which businesses secure funding against their unpaid invoices, while the remaining 20% represents asset based lending, in which businesses can raise money secured against a range of other assets they own, including inventory, property and machinery.

Compared to the average fall in bank lending of 3% to 4% per year it’s clear that whilst many businesses may be forced to consider alternative sources of finance the fact that funding sources are now more diverse can only be a positive move.

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