Asset-backed lending to UK firms hits record high of £4.3bn

THE AMOUNT of asset-backed lending available to UK businesses has reached a record high of £4.3bn, a 22 per cent increase on last year.

According to the Asset Based Finance Association (ABFA), the total amount of asset based lending and invoice finance secured by UK businesses has also reached a record high of £20.7bn, up from £19.9bn last year. While 80 per cent of asset based finance comes from invoice finance, asset-backed lending is growing rapidly, the association said.

“There is a significant amount of capacity for even more lending through alternative finance that an increasing number of businesses are recognising as a source of funding,” said Jeff Longhurst, chief executive of the ABFA. “Asset based lending is now a mainstay of the business finance market, and all businesses will have an asset that they can use to secure finance, including plant, machinery, and even stock.”

The ABFA’s research found that the value of finance available from stock alone increased from £2.4bn to £2.9bn in just three months, while the amount of finance made available against plant and machinery reached £1.1bn. Overall lending against machinery, unsold stock and similar hard assets has increased by a massive 71 per cent over the past five years.

Read more: SMEs struggle to access finance as banks don’t meet their needs

Increased awareness of alternative finance providers such as peer-to-peer lenders and the introduction of government initiatives such as the bank referral scheme have encouraged businesses to consider asset-backed finance.

Longhurst added: “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.”

Read more: One in five SMEs turn to P2P loans to fund growth