Use of Asset-Based Finance Reaches New Peak as UK Firms Look to Fund Growth

UK businesses obtained an all-time high of £19.4bn in asset-based funding in 2014, up by £1.6bn from 2013

More firms are looking to asset-based funding providers to help finance growth than ever, with £19.4bn secured by UK firms in the last three months of 2014, increasing from £17.8bn in the previous period in 2013.

According to research by the Asset Based Finance Association (ABFA), there is also an additional £20.5bn of unused facilities, which businesses can tap into if necessary.

The ABFA consider the overall increase in asset-based funding, 80% of which is invoice finance (finance secured against unpaid invoices), a positive indication that more firms are using this type of finance to fund growth rather than merely replacing bank finance, which it was more traditionally used for.

This, according to the report, is evident in the increase of businesses using the funding route since the recession period when bank finance was exceptionally hard for businesses to access, with 38% more firms using asset-based finance now than in 2009.

Jeff Longhurst, chief executive of the ABFA, commented on the change in the alternative funding options use:

“The speed at which asset-based finance facilities can be agreed or extended makes them an ideal way for businesses to respond quickly to growth opportunities as they arise as the economy recovers.

“For a business looking to capitalise on a growth opportunity being able to rapidly raise and deploy funds can give you a vital edge over your competitor. Having in place the finance that allows you to move faster than your competitor allows you to fill orders quicker, make quicker hiring decisions, secure those new premises and take market share quicker.”

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