Large-business demand boosts asset based finance in the UK by 16% in last 12 months

The ABFA added that this is more than a fivefold increase on the £1 billion in asset based finance provided to big businesses 10 years ago (see graph below), as asset based finance increasingly becomes a mainstream method of funding for large businesses.

The ABFA explained that asset based finance includes invoice finance, in which businesses secure funding against their unpaid invoices, and asset based lending, in which businesses can raise money secured against a range of other assets they own, including stock, property and machinery.

At the end of March 2014, 315 big businesses in the UK and Ireland were using asset based finance, compared with 277 a year ago, and just 81 in 2004. The ABFA believes that this growth demonstrates asset based finance is on its way to becoming as popular as it is in the US, where it has been accepted as a mainstream funding product for many years.

The ABFA says that this growth in asset based finance use by big businesses marks a sea change in the commercial finance market.

Jeff Longhurst, chief executive of the ABFA, said: “We’ve entered a new era for business funding, where asset based finance is an everyday part of the commercial finance toolkit for businesses of all sizes.”

“Financing tools like these have already been commonplace in the US for a long time, and have played a key role in funding the recovery for a lot of businesses in sectors like manufacturing. We’re now seeing big British businesses following their lead, and using asset based lending as a vital part of their growth plans.”

“There are a lot of UK businesses who are seeing opportunities for growth, whether through taking on large new orders, investing in their research & development programmes, or recruiting new staff. More and more of them are now borrowing against their assets to fund that expansion.”

“There are general concerns about the availability of finance for businesses and the consequences this could have for the recovery.  The asset based finance market in contrast – while it has grown sharply-still has unused capacity, and providers are actively looking to grow their lending books.”