Asset-based finance is fast becoming as popular in the UK as it is in the US, with its use among large firms here growing fivefold over the past decade.
That is according to a body representing the asset-based finance industry, the ABFA, which claims that £5.1bn of asset finance – where companies use their balance sheet assets to borrow money – was provided to large UK firms last year.
That is a 16 per cent rise on the £4.4bn provided to big businesses – defined as firms with a turnover of more than £100m – a year earlier and a fivefold increase on the £1bn provided in 2004.
Asset-based finance is on its way to becoming as popular as it is in the US, where it is already accepted as a mainstream funding product, ABFA chief executive Jeff Longhurst claimed.
"There are a lot of UK businesses who are seeing opportunities for growth, whether through taking on large new orders, investing in their R&D programmes, or recruiting new staff. More and more of them are now borrowing against their assets to fund that expansion," Longhurst said.
"There are general concerns about the availability of finance for businesses and the consequences this could have for the recovery. The asset-based finance market in contrast, while it has grown sharply, still has unused capacity, and providers are actively looking to grow their lending books."
Asset-based finance can come in the form of invoice finance or asset-based lending, depending on whether funds are secured against unpaid invoices or assets such as stock, property or machinery respectively.
At the end of March 2014, 315 big businesses in the UK and Ireland were using asset-based finance, compared with 277 a year earlier, and just 81 in 2004, the ABFA claimed.
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