Asset-based lending and Invoice Finance up

Asset-based lending providers have reported increased funding levels to UK businesses by 2 per cent in the second quarter of this year compared to the same period in 2009.

Whether the figures are indicative more of a willingness of UK SME’s to borrow in the first place, a switch from traditional bank lending or down to an up and coming increase to GDP is anyone’s guess.

Growth in invoice finance facilities issued to UK small to medium businesses also saw an increase of 7 per cent over the same period, according to figures released by the Asset Based Finance Association (ABFA). Total asset based commercial finance, advanced to businesses by was believed to have been £14.59 billion during the 2nd quarter.

By contrast, net lending to businesses from sources other than asset-based finance declined by £3.5 billion, or down a significant 8.1 per cent from the same time last year.

If this is a case of putting 2 (asset based borrowing up) and 2 (bank lending down) together then 4 would seem to suggest that the appetite for UK business to borrow is not as flat as the banks claim? Otherwise there surely would be a likewise drop in all forms of commercial borrowing?

As reported in many news sources over the year, invoice finance has become an increasingly popular commercial funding tool as the funds released are effectively coming from within the company itself (i.e. its sales activity and resultant ledger), rather than the company incurring additional debt.

As a likely result of the upturn in the appetite for, and use of asset based finance, sales from asset based funded companies also increased by 13 per cent in the second quarter of the year, according to a recent ABFA report.

What is Asset-Based Finance?

Put simply, this form of commercial finance is specialized method of providing structured working capital and term loans that are secured by a business’ sales ledger and/or inventory, machinery, equipment and/or property. This type of funding is great for start-ups, perhaps to refinance existing loans, fund growth or to enable mergers and acquisitions, or management buy-outs (MBOs) and buy-ins (MBIs).

Factoring Finance Ltd have more than 30 years experience in finding the best invoice and asset backed finance solutions for UK business. With an extensive broker network and access to sector specialists, Factoring Finance can start unlocking the potential in your business, free up the cash in your outstanding invoices and leave you to put more time into your business.  For more info on  Invoice Factoring, Invoice Discounting, Assest Based Finance or any other of our services please give us a call.


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