Growing number of small businesses borrowing against assets
Change in Britain's lending landscape as companies raise funding against assets such as inventory and even intellectual property
The number of start-ups and small businesses borrowing against assets such as inventory, machinery and property is growing rapidly, according to the Asset Based Finance Association (ABFA).
A record level of £4.2bn in alternative business finance has been secured against hard assets – an increase of 9% on £3.8bn a year ago.
The overall amount of such funding provided to businesses, including invoice finance, has increased by £370m over the last year to reach £19.3bn by the end of June.
The news is evidence of an ongoing change in Britain’s lending landscape as businesses of all sizes choose to combine different sources of alternative funding over traditional forms of borrowing such as bank loans and overdrafts.
The ABFA has also seen firms beginning to borrow against more unusual and intangible assets such as intellectual property and income streams to access growth funding.
Jeff Longhurst, chief executive of the ABFA, said: “The benefits of invoice finance are getting increasingly well known, but in addition to that, borrowing against hard assets is one of the innovative forms of alternative finance that has really gone mainstream in the last couple of years.
“More and more businesses are starting to see so-called alternative finance as their primary form of funding, rather than just as an unconventional complement to traditional lending.
“For businesses with substantial assets tied up in warehouses, for instance, or in plant and machinery, this can be an excellent way to access lending to drive investment.”