According to figures from the Asset Based Finance Association (ABFA), the body representing the asset based finance industry in the UK and the Republic of Ireland, the three months to June 30 2014 was the biggest quarter for asset based finance, with a record GBP 18.9 billion of funding provided to businesses.
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%) of the total advanced through asset based finance in the last three months was used by companies with an annual turnover of more than GBP 100 million.
The ABFA also explains that 80% of asset based finance is invoice finance, in which businesses secure funding against their unpaid invoices, while the other 20% 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.
In recent news, ABFA highlighted that the Governments decision that banks must forward SMEs unsuccessful loan applications to other potential finance providers, including asset based financiers, could deliver a major boost to small business funding in the UK.
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