News and Events

Asset finance continues to grow


The latest statistics from the ABFA have revealed that asset based finance continues to grow despite challenging economic conditions.

Between the months of April and June this year the total number of businesses using asset based finance rose by 4%, compared to the same period in 2011, reaching almost 43,000, according to the statistics.

The report goes on to reveal that total advances to businesses increased by 2% compared to Q2 2011, to £16bn, while there was a 4% increase in total funding available rising from £22.5bn to £23.3bn.

Invoice discounting remains the most popular form of asset based finance, as 18,500 businesses currently use it, compared to the 17,300 in Q2 last year.

Despite the positives, client sales in Q2 showed little change to the same period last year, suggesting businesses are still apprehensive regarding taking up additional funding.

Kate Sharp, chief executive of the ABFA, said: “At the beginning of the year there was some optimism that there would be business growth, but with the exception of manufacturing, expectations of growth have not been fulfilled. Although there is funding available from our industry, at the moment many companies lack the confidence to take full advantage of the finance available to them.

“However, with a 23% growth over the past year in advances to companies with less than £500k turnover, it is particularly heartening to see the industry supporting the UK’s economic growth agenda by offering increased financial support to these micro and start-up businesses.”

Evette Orams, managing director of Hilton-Baird Financial Solutions, commented on the statistics: “We are pleased to see that the asset based finance industry continues to provide crucial support to UK businesses. The 2% year-on-year increase in total advances to clients, as reported in the ABFA’s latest statistics, demonstrates that more businesses are benefiting from this tailored and expert cash flow solution. With client numbers also increasing by 4% to almost 43,000, this is reassuring given that access to traditional bank finance still remains restricted.

“The figures also reveal an impressive 23% annual increase in advances to businesses with a turnover of less than £500,000. This highlights the sector’s ongoing support to the UK’s SMEs despite the challenging economic climate. Access to the right funding is crucial if businesses are to realise their growth potential, with the asset based finance industry a key funding route which can meet the cash flow requirements for businesses of all sizes.

“It is equally important to note that the total £16 billion advanced to clients only covers funding from the ABFA’s members and does not capture the funding made available by reputable non-ABFA members. This would add to the volumes of UK businesses large and small who are recognising the benefits of releasing the cash tied up in their company’s assets.”