Asset finance usage by businesses in the UK and Ireland has increased by over £8bn since the dawn of the credit crunch almost ten years ago.
In the latest report from the Asset Based Finance Association (ABFA), it was revealed that £22.2bn of asset finance was advanced to client businesses at the close of the final quarter of 2016, up £8.1bn on Q1 of 2007.
Over that same period, the number of outstanding traditional business loans fell by 8% and the current figure is 31% below the peak for business loan books.
As traditional forms of lending became more of a challenge for businesses to secure following the credit crunch, asset finance, and particularly invoice financing, became more viable options for businesses.
Since the end of the recession in 2009, asset-based finance has become the go-to source of funding for many businesses, with substantial growth in firms borrowing against the value of other assets, including machinery and unsold stock or property.
A majority of asset-based finance activity by volume is invoice finance, whether that be factoring or invoice discounting, where businesses look to secure funding against their debtor book, represented by their unpaid invoices.
Jeff Longhurst, ABFA chief executive, said: “Asset-based finance was a real lifeline for small businesses during the financial crisis, but it has become a driver of growth for businesses of all shapes and sizes.
“For a large number of businesses, unpaid invoices are actually their biggest asset, and can be the key to unlocking the finance they need to accelerate their growth.
“While many businesses were initially drawn to invoice finance during the credit crunch, they have retained it as a key part of their funding model a decade later.
“Many bigger businesses have also looked to invoice finance to fund their acquisitions, and have moved on to using more assets than just their invoices to finance expansion.”
To find out how your business could benefit from invoice discounting, and asset finance in general, contact one of our in-house specialists and they will be able to talk you through the available options.