Press release from the ABFA:
- Jumps 7% in three months and 10% in a year
- Largest companies account for almost a third of all advances
The three months to June 30th 2014 was the biggest ever quarter for asset based finance, with a record £18.9 billion of funding provided to businesses, says the Asset Based Finance Association (ABFA), the body representing the asset based finance industry.
According to figures from the ABFA, the combined amount of invoice finance and asset based lending provided to businesses leapt by seven per cent in the last quarter, from £17.7 billion in March 2014, and 10 per cent in the last year, from £17.3 billion in June 2013.
The ABFA says that demand has partly been fuelled by constraints on traditional lending, but that is has also gained traction as more businesses gain an understanding of how borrowing against the value of their invoices and other assets can free up cash to invest in growth.
The ABFA points out that it is not just SMEs – typically seen as the hardest hit by constraints on traditional lending - who are making use of this facility.
Almost a third (31 per cent) of the total advanced through asset based finance in the last three months was used by companies with an annual turnover of more than £100million.
The ABFA explains that 80 per cent of asset based finance is invoice finance, in which businesses secure funding against their unpaid invoices, while the other 20 per cent represents the fast-growing area of asset based lending, in which businesses can raise money secured against a range of other assets they own, including inventory, property and machinery.
Jeff Longhurst, Chief Executive of the ABFA says:
"Asset based finance is a proven tool for growth, enabling companies to increase their funding as they grow. Asset based finance is funding record levels of new jobs and business investment.""What's becoming increasingly clear is that asset based finance such as invoice finance in particular, is the alternative to traditional lending for SMEs that the Bank of England and the Treasury have been looking for.""We are seeing more and more businesses of all sizes and types taking advantage of invoice finance to fuel their growth, particularly as more traditional forms of lending remain subdued. More businesses are viewing their invoices as what they are – one of their biggest assets.""Asset based lending is fast becoming a standard part of the finance suite for bigger businesses. As the economic recovery hits its stride, having funding that automatically expands with your business is a huge bonus. The ability to increase the size of your borrowing facilities as your business grows is one of the biggest strengths of asset based finance.""That's a big plus for many businesses, because they don't have to keep re-evaluating their funding position and proving themselves to their lenders."
Amount of asset based finance advanced to businesses hits record high…
…While traditional lending to businesses falls by more than a fifth
The full statistical release, along with historical data are available at: https://www.abfa.org.uk/members/statistics.asp
