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Peer2Peer Finance News | August 18, 2019

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Three in four UK SMEs oblivious of asset-based finance despite sales boom

Three in four UK SMEs oblivious of asset-based finance despite sales boom
Anna Brunetti

THREE in four UK small- and medium-sized enterprises (SMEs) continue to miss out on non-bank funding despite record sales of asset-based finance, new research claims.

While fresh figures from the Asset Based Finance Association (ABFA) revealed that asset-based lenders arranged an all-time record of £79.3bn in credit facilities in the fourth quarter of 2016, fewer than half of SMEs across the country would consider asset-based lending over a loan or overdraft.

The latest quarterly “business barometer” from lending firm Close Brothers showed that 72 per cent of SMEs are still unaware of finance options based on turnover rather than credit rating.

This contrasts with the upbeat 13 per cent increase in asset-based lending recorded by ABFA at the end of last year, compared to a year earlier – with £22.2bn of funds having been already drawn down and a further £39.5bn still available within credit facilities.

Read more: SMEs missing out on business opportunities due to lack of finance

“Funding such as invoice finance and other types of asset-based lending can provide crucial capital as businesses seek to invest for their future, and the increased sales of these products reflects growing confidence amongst SMEs,” said Close Brothers Invoice Finance’s chief executive David Thomson.

“However, our own research suggests that many businesses still don’t understand the opportunities available to them and that many more SMEs could benefit from looking beyond the traditional options for funding.”

Read more: SMEs set for £7bn cost surge in 2017

Compared with traditional finance hinging on the borrowers’ credit ratings, alternative providers offer SMEs a scalable funding stream that gives them vital headroom as they explore new growth projects and avenues, the research claimed.

“Increased take-up of funding such as asset-based finance could really super-charge their growth,” said Thomson.

A persistent lack of awareness could choke SMEs’ growth, he warned, especially at a time when their confidence is bouncing back after the heavy blow dealt by the Brexit vote.

Read more: Quarter of London SMEs turned down for credit