UK asset-based finance surges to all-time high in 2016

ASSET-BASED finance to UK businesses has risen by 13 per cent over last year, hitting an all-time high of £22.2bn.

The Asset Based Finance Association (ABFA), who compiled the research, said that the UK’s biggest companies have played a key part in this increase in demand, as they look to fund new projects, growth opportunities and acquisitions.

Businesses with an annual turnover of more than £100m have secured £8.1bn of asset-based funding over the last year – a 21 per cent increase from 2015.

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The trade body said that asset-based finance had grown by seven per cent in the last quarter of 2016, which it attributed to businesses looking to create a ‘cash cushion’ in the wake of Brexit-induced financial instability.

APFA said that invoice finance – which allows businesses to release the working capital tied up in their unpaid invoices – accounted for as much as 80 per cent of asset-based debt that businesses across the country used to fund mergers, growth opportunities and new projects.

Asset-based finance in the UK

Source: ABFA

The remaining 20 per cent comprised asset based lending, which provide a broader mix of funding facilities against the entire range of business assets such as inventory, property, and forward income streams.

“Larger businesses are increasingly using asset based finance in innovative ways to fund their growth and M&A activity,” said ABFA’s chief executive Jeff Longhurst.

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“It is already well used amongst SMEs, but now larger businesses are well aware of the opportunities it provides them. Being able to release the value in a target company’s invoices can often be the critical factor in an acquisition.”

“All sizes of UK businesses need to be aware of the possibilities and opportunities that asset based finance can provide them beyond what traditional sources can often offer them.”

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