Asset-based finance provided to UK and Irish businesses is set to top £20 billion in 2015, according to research by the Asset Based Finance Association (ABFA).
The ABFA Annual Confidence Survey suggests the body’s members expect £20.8 million of asset-based finance to be advanced to businesses by the end of 2015.
By the end of 2014 £19.4 million was raised in annual asset-based finance – itself a record high.
Around 80% of the 2015 funding is forecast to be raised through invoice finance – where businesses borrow against the value of their unpaid invoices. The other 20% is expected to be borrowed through wider asset-based funding – cash raised against assets such as stock, machinery or property – as well as against debt.
There is also high confidence among ABFA members about the wider economy. Around three-quarters (73%) expect the expect conditions to improve – with the remaining 27% expecting the situation to remain stable.
ABFA CEO Jeff Longhurst said that asset-based finance is now “in pole position to become a leading alternative to traditional loans”.
“Invoice finance is already widely recognised by firms as a quick and straightforward way to leverage the underlying strength of their business, unlocking funding to grow,” he continued.
“SMEs in particular are seeing the value of converting their unpaid invoices into ready capital for investment, whether they need to hire new sales staff, expand their premises, buy new tools and equipment or focus on R&D.”
Longhurst went on to say that the financing option is growing in popularity as companies of all sizes see the benefits of using their inventory, equipment and other stock as security.
“That security allows them to access business finance they might not otherwise have got,” he said.
Further reading on funding: Mind the SME funding gap