Asset-based lending appeal widens

Bibby Financial Services says its latest survey of commercial finance needs and challenges in mid- to large-sized businesses suggests enthusiasm for asset-based lending (ABL) is on the increase.

The survey, the second in an ongoing series of quarterly reports, found 74% of those polled plan to seek working capital in the next 12 months, an increase of 30% over the Q1 2016 survey.

Growth strategies top the list of funding needs at 57%, a 19% increase over the Q1 survey. Additional reasons for accessing capital include new equipment (48%) and technology (47%).

Half (50%) of the survey’s respondents believe their ability to grow their business is impeded by a lack of access to funding. However, these companies look often, with 41% seeking funding at least once a quarter with an average amount of nearly $360,000.

These decision makers are increasingly exploring ABL, which 38% now says they are considering as a funding solution. This is a significant increase of 23% over Q1. One-third of respondents used this commercial finance tool in the past year.

The fast pace of technology was cited as a critical reason for businesses to feel strapped for cash. Over half (61%) of respondents reported rapid technology changes leave them with an unexpected need for funding. Access to new and updated technology is critical to success, with 98% of those surveyed agreeing with this statement, and a majority (85%) stating they will seek outside funding to meet this need.

Survey respondents placed a high priority on equipment as well, with 91% saying it is critical to success. However, one in four need funding to replace obsolete equipment.

“Business leaders report that keeping current with fast moving technology and infrastructure is a high priority, but doing so can be costly and require working capital funds,” said Ian Watson, chief executive officer of Bibby Financial Services North America. “At Bibby Financial Services, we provide companies in a wide range of industries with financial solutions. In the first half of 2016, we funded more than $35.5 million with a heavy emphasis on manufacturing and professional services. These industries rely on cutting-edge technologies and specialized equipment, which often requires access to additional working capital over and above what can be obtained from banks and more traditional lending sources.”