Asset based lending backed

The latest quarterly figures released today by the Asset Based Finance Association (ABFA); show that asset based finance backed businesses have seen a small increase in sales as they find new business pipelines. Over the last quarter, total client sales stood at £46,656 million, an increase of three per cent on March's figures.

Within the industry, Asset Based Lending specifically saw the greatest increase in activity, with advances against stock, debt, plant and machinery and property all seeing a rise. Not surprisingly, the largest area of growth came in advances against plant and machinery, suggesting that companies are keen to use what they have to generate funding and streamline their businesses.

While there has been a drop in the amount total advances, the asset based finance industry compares more favourably than other traditional funding routes. For example, the latest Bank of England figures show that business lending fell by a record £8.4 billion in July. This 1.7 per cent fall in lending to "private non-financial corporations" is far worse than June's 0.2 per cent decline and is the biggest since the Bank of England's records began in 1997.

Kate Sharp, chief executive of the ABFA, said: "The last quarter has proved to be a challenging time for businesses, finance and credit has been difficult to secure. However, as the figures show asset based finance is still providing a solid funding stream for 48,000 UK and Irish businesses. As an industry, we are still advancing in excess of £14 billion.

"While these figures do show a slight drop in overall lending, this is expected and reflects a wider economic trend, in terms of a fall in overall UK business activity as firms downsize and change their business strategy. Asset based finance remains a key funding source for businesses today, it is a robust and reactive option that is ideally placed to support growing businesses in the current climate."

Author: The Asset Based Finance Association, 07/09/2009