Small Business Asset Financing Hits Record High
Enterprises are "turning backs" on traditional lending, instead opting to raise cash against property and machinery
The amount of finance raised by UK small businesses borrowing against ‘hard assets’ has risen 7% in a year to hit £3.63bn – a record high – according to a report by the Asset Based Finance Association (ABFA).
The survey reports a shift in the way businesses are seeking to obtain finance, with enterprises said to be “turning their backs” on traditional lending and opting to raise cash against inventor, property and machinery instead.
UK businesses secured £358m against plant and machinery this year, an increase of 37% from £261m last year.
ABFA has said that businesses are increasingly attracted to the advantages of asset based finance as it’s ‘less risky’ than overdrafts and, therefore, requires banks to hold back less capital for that kind of finance.
Jeff Longhurst, chief executive of the ABFA, commented:
“UK businesses now have a greater understanding of how their assets can be used to unlock capital. They are successfully investing this into the growth of their business, whether that be increasing headcount or expanding their order book.
“Borrowing against assets has now become a more mainstream option for businesses of all sizes looking to unlock funding and fuel growth.”