Asset Based Lending Reaches Record High in UK

pound coins – Asset Based Lending Reaches Record High in UKFigures released by the Asset Based Finance Association (ABFA) reveal that the amount of finance made available to UK businesses through asset based lending leapt to a record high of £4.3 billion in Q3, up 22% over the same period last year.

Asset based lending allows businesses to borrow against assets – including property, intellectual property, inventory and machinery – that they already own.

The ABFA says that this form of alternative finance is playing an increasingly important role in filling the funding gap that UK businesses continue to experience, especially during the period of economic uncertainty following the UK’s decision to leave the EU in June. It adds that businesses could face higher import costs with the fall in the value of sterling, and even longer payment delays.

Graph showing asset based lending  figures

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Over the past three months, finance being made available against stock has risen from £2.4 billion to £2.9 billion, whilst finance available against plant and machinery has reached £1.1 billion.

According to the report, businesses of all sizes are now being made aware of asset based and other types of alternative finance since the government announced its Bank Referral Scheme initiative in November.

Alex Fenton, founder and CEO of GapCap, commented on the announcement:

“As asset based lending hits an all-time high, the voices of those last remaining detractors of alternative finance are being drowned out by the clamouring of thousands of businesses eager to embrace new opportunities in an uncertain time. Invoice financing is proving its worth, especially amongst the SME marketplace, and with the government’s support providing further rocket fuel to the sector, its growth isn’t likely to slow anytime soon.”

The total amount of asset based lending secured by UK businesses has now reached £20.7 billion – another record – up 4% from £19.9 billion last year.

Jeff Longhurst, Chief Executive of the ABFA, said that asset based lending offers a real solution for businesses, with a growing number now recognising this form of funding as a mainstay in business finance.

“With the introduction of the new Bank Referral Scheme, an even larger number of businesses will recognise the options open to them and will be able to secure finance through asset based lending and invoice finance.”

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