£4.3bn asset-based lending helps fill funding gap for UK businesses

More UK businesses recognise asset-based finance as an option following Brexit uncertainty and the launch of the government's Bank Referral Scheme

The amount of asset-based lending available to UK businesses has reached a record high of £4.3bn following a 22% increase from last year, according to the Asset Based Finance Association (ABFA).

Up 71% since 2011, the available amount has seen recent dramatic rises. In just three months, finance available against stock has risen from £2.4bn to £2.9bn, while finance available against plant and machinery equipment has reached £1.1bn.

Asset-based lending allows businesses to secure loans with collateral, such as unsold stock, property, intellectual property, plant and machinery and other assets.

This form of alternative finance is instrumental in filling the funding gap for UK businesses. With continuing economic uncertainty resulting from the UK’s vote to leave the EU, asset-based finance gives businesses the opportunity to vary their sources of finance away from traditional loans and overdrafts.

Awareness among businesses of this option is increasing, in part due to the launch of the government’s new Bank Referral Scheme: nine of the UK’s largest banks will now be required to pass businesses they cannot support on to alternative finance platforms, of which asset-based finance is one.

Jeff Longhurst, chief executive of the ABFA, commented: “There is a significant amount of capacity for even more lending through alternative finance that an increasing number of businesses are recognising as a source of funding.

“Asset-based lending is now a mainstay of the business finance market, and all businesses will have an asset that they can use to secure finance, including plant, machinery, and even stock.”

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