ASSET-based financing has grown 13 per cent in the last year to a record high of £22.2 billion, with Brexit insecurity and borrowing against acquisition target invoices cited as reasons for the rise.
The 7.8 per cent increase is thought to have occurred because larger businesses are turning to asset finance to supplement traditional fund sources such as overdrafts and loans.
The figures, released by the Asset Based Finance Association (ABFA) show large businesses have increased their usage of this type of finance by 21 per cent in the last year, from £6.7bn to £8.1 bn.
Asset finance is typically used by small and medium-sized enterprises (SME) through the likes of invoice financing and factoring to improve cash flow, or asset-based lending, which provides funding based on a range of company assets, from property to machinery.
Invoice finance accounted for more than 80 per cent of the total, at £17.9bn.
The ABFA said that asset based finance is now regularly being used to fund M&A transactions by allowing businesses to borrow against the value of the target firm’s invoices.
Jeff Longhurst, chief executive of the ABFA, comments: “Asset based finance is already well used amongst SMEs, but now larger businesses are well aware of the opportunities it provides.”
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