Asset based finance sees double digit growth

Underpinning the UK’s economic recovery, the Asset Based Finance Association (ABFA) has announced new quarterly figures which show the highest levels of advances to companies since 2008. This is in marked contrast to overall UK net lending figures which continue to fall.

The new figures (for quarter 2, April – June 2013) show that total funding advanced by the ABFA’s members to firms has leapt 10 percent year on year, the balance rising from £15.8 billion to £17.4 billion (June 2012 – June 2013). This is the highest balance of advances since September 2008 and only the third time this has topped £17 billion.

Total funding available has also seen a healthy increase of 14 percent year on year. In combination both sets of figures show that firms which use asset based finance are feeling more confident in arranging new funding lines and have higher levels of demand to actually access the finance. It also highlights the growing need for asset based finance within the UK economy, as wider net lending fell by 3.5 percent in the 12 months to June 2013, marking the biggest fall in net lending since June 2012.

Sales from firms using asset based finance have also risen markedly, reaching £131.2 billion in June 2013, a rise of some 12 percent in the past year. The levels of stock held as assets have also risen by a massive 24 percent, suggesting that firms using asset based finance are using the increased funding to raise stock levels in line with rising consumer demand for goods.

The figures also paint a convincing picture of rising export demand, with both export factoring and export invoice discounting seeing growth of 28 percent and 13 percent respectively. This indicates that as both the EU and America, the UK’s two largest trading partners, continue their own recovery, companies are taking advantage of this and working hard to raise sales through exports.

Both small and large companies are enjoying the rising confidence, with advances to small firms (£500,000 – one million t/o) recording 6.2 percent growth in the last quarter alone, whilst larger companies (£50 million – £100 million t/o) have similarly seen growth in advances of some 14.3 percent. This shows the clear strength of asset based finance as it suits growing companies, both large and small.