Use of asset based finance by the UK’s biggest businesses has grown by 16 per cent in the past year, from £4.4 billion to £5.1 billion, says the Asset Based Finance Association (ABFA).
ABFA says that this is more than a fivefold increase on the £1 billion in asset based finance provided to big businesses ten years ago, as asset based finance becomes a mainstream method of funding for large businesses.
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.
Jeff Longhurst, chief executive of 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 United States 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 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.”