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In the UK and Ireland, as well as the rest of the world, traditional bank funding is suffering at the hands of the credit crunch. As funds dry up where previously money flowed freely, more and more businesses are looking to alternative forms of finance. Among them asset based finance is beginning to attract the attention it has long deserved and is becoming more high profile.
Asset based finance – the process of borrowing money against outstanding invoices, premises, equipment, machinery, fleet and even a brand – is now the first port of call for many companies looking for funding. The figures from the Asset Based Finance Association (ABFA) show that during the first half of the year, the industry advanced over £17.3 billion against invoices, stock, property and other trading assets worth a total of £31.2 billion, a growth of 15 per cent. This significant growth exceeded that of traditional funding to private non-financial organisations which grew by just 13.2 per cent over the same period.
The ABFA’s recently commissioned Economic Report also highlights that both retail and non-retail sales have remained volatile over the past six months. Evidence collected from ABFA members’ show that domestic sales dropped in the first quarter but picked up in the second.
Kate Sharp, chief executive officer of the ABFA, said: "As the economy tightens securing traditional funding through banks and other financial organisations has become really difficult. As a consequence businesses are looking elsewhere for financial support.
"Companies are examining their own balance sheets more closely to identify
where capital is tied up and how they can become more aggressive about utilising
their assets. The format of securing outside investment is no longer possible
so firms are looking within themselves to generate funding that will grow inline
with their business."
To view the full Economic Report on the statistics for quarter two 2008 visit
www.abfa.org.uk
To view the full report on the statistics for Quarter Two 2008 please click here.
Please click here to view ABFA Economic Report 2008.