Recent figures released by the Asset Based Finance Association (ABFA) , show that in the first quarter of 2017 use of invoice finance and asset-based finance rose sharply by 14% to £21.9bn, up from £19.3bn at the same point a year earlier.
The ABFA suggest that this significant leap is due to larger businesses, including many of the UK’s biggest companies, using non-traditional sources of finance for expansion or to fund M&A activities. The figures certainly suggest that this trend is gaining pace amongst businesses with turnovers in excess of £100M, rising by nearly a quarter (23%) in a single year.
Jeff Longhurst, Chief Executive of the ABFA, commented: “More and more companies are having a ‘eureka’ moment . . . big business is developing a hearty appetite for asset based finance.”
Of course, in the SME world, we had our “eureka” moment a long time ago and at Ultimate Finance we’ve a proud history of helping smaller business owners access the cash they need in quick and convenient ways.
It’s worth pointing out that despite rapid growth among bigger businesses, the SME market still accounts for the other two-thirds of the annual lending figures. That said, the rate of growth in the SME sector is notably slower than that amongst their larger contemporaries.
This can be attributed to a ‘fear of funding’ – a misconception that borrowing could be detrimental to business. We recently conducted research into this, and found this fear to be on the rise. Partly due to economic uncertainty and partly due to deeply ingrained ‘myths’ around funding, we are working to tackle this challenge.
Because, SMEs shouldn’t be afraid to borrow money. Cashflow is essential to any business – a fact clearly evidenced by the ABFA figures – either for growth or maintenance. Big companies know this, and are obviously seeking new and innovative ways to access the money they need via asset-based finance options.
It’s a safe and easy-to-understand way to get at the cash you need to build your business. Whether you have outstanding invoices you can leverage for your immediate needs, or you want a quick cash injection to take advantage of a new contract, asset-based finance is a smart way to borrow.
As the UK’s largest businesses increasingly recognise that asset-based finance products present a brilliant opportunity to help them grow bigger still, it’s important that SMEs don’t start to fall behind. After all, they knew the secret first!
From July 1st 2017, ABFA joined with several other trade associations to become UK Finance. This new trade body will represent around 300 firms in the UK providing credit, banking, markets and payment-related services.
Find out more about Asset Finance here.