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Asset-based finance now ‘primary source of funding’ for corporates, worth £20bn in 2015

A report by the Asset Based Finance Association (ABFA) shows an increase in the use of asset-based finance by businesses in the UK, with the amount of funding accessed standing at £19.7 billion at end of December 2015. This is a rise of £260 million in the past year.

In 2015, 893 large companies (turnover above £50 million) used invoice financing, compared to 713 companies in 2014. Asset-based financing is increasingly being used to complement traditional sources of finance, according to the ABFA and about 80 per cent of asset-based finance is secured against unpaid invoices.

However, companies are also increasingly using stock to secure loans and 20 per cent of asset-based financing is secured against a company's assets, such as inventory, property and machinery. The amount of asset-based finance secured by UK businesses against stock was £607 million in 2015, compared to £499 million in 2014, representing a rise of 22 per cent.

The ABFA is the body representing the asset-based finance industry in the UK and the Republic of Ireland. Chief executive Jeff Longhurst said: “Asset-based finance is now one of the primary sources of funding for businesses of all sizes. It is competitively priced and providers can also offer quicker decisions on asset based finance than on traditional unsecured lending.”

CTMfile Take: This market is probably growing as the result of tighter liquidity in the banking sector and the pressure companies are facing to wring every last drop out of their working capital. 

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