Small Business Asset-Based Finance Hits Record Level
Rising number of small firms securing finance against assets such as inventory and property marks a shift in the UK’s funding landscape
The percentage of small businesses using asset-based financing has increased rapidly and now amounts to a record £4.2bn – up 9% from last year’s £3.8bn – a report by the Asset Based Finance Association (ABFA) has found.
Small businesses are raising finance against a multitude of assets including inventory and property; with an increasing number of firms raising cash against unusual and less tangible assets such as intellectual property and income streams.
The report exemplifies the changing lending sphere in the UK, as businesses turn to alternative finance options for funding – up £370m to £19.3bn this year – with many companies choosing to combine different sources of alternative funding over bank loans and overdrafts.
Jeff Longhurst, chief executive of the ABFA, said:
“The benefits of invoice finance are getting increasingly well known, but in addition to that, borrowing against hard assets is one of the innovative forms of alternative finance that has really gone mainstream in the last couple of years.
“More and more businesses are starting to see so-called alternative finance as their primary form of funding, rather than just as an unconventional complement to traditional lending.
“For businesses with substantial assets tied up in warehouses, for instance, or in plant and machinery, this can be an excellent way to access lending to drive investment.”