No change in appetite among lenders to fund soft assets

The majority of commercial finance brokers say they have seen little to no change in the willingness of lenders to fund soft assets, while two-in-ten say conditions have worsened.

Latest survey data from Asset Advantage has revealed that 68% of commercial finance brokers have seen no significant change in appetite among lenders to fund soft assets such as software, telecoms equipment, office furniture or soft furnishings.  

Compared to hard assets, such as machinery, vehicles and heavy equipment, soft assets are considered less secure due to their lower residual value. Despite this, they generally include business critical equipment, yet brokers continue to face difficulties in finding appetite among funders.

One broker said: “Similar appetite to fund soft assets in the market, in fact it has not seemed to have changed much over the last 10 years.”

More than 20% of brokers said conditions have worsened. Replying to the survey, one said: “Funders are becoming more specific on the assets they will fund and this naturally moves the range of assets away from soft. Only a few consider soft assets and their balance sheets have to be robust.”

All is revealed in the latest survey from Asset Advantage, one of the UK’s independent providers of business finance for SMEs. The survey questions commercial brokers on a range of topics to determine the state of play and changing demands of the commercial finance market. The aim is to uncover the key challenges facing commercial brokers when securing funding for clients as well as their thoughts on lender appetite and the lending landscape.

“It ultimately comes down to the funder’s approach to risk and how willing they are to look beyond equipment valuations and to the credibility of the proposal and the business behind it,” he added.