Asset-based finance is becoming a ‘mainstream method’ of funding for larger businesses, says the Asset Based Finance Association (ABFA).

As part of the organisation’s latest market analysis, growth of 16 per cent has been noted for businesses posting revenues of nine figures or more.

The climb, from £4.4 billion last year to £5.1 billion this year, is representative of the finance option becoming a ‘vital conduit’ for big businesses, ABFA says. Funds secured, either through invoice finance or asset-based lending, are being used to expand capacity or increase investment in research and development.

Figures from ABFA shows that, at the end of March 2014, some 315 big businesses in the UK and Ireland were using asset-based finance, up from 277 a year ago and 81 in 2004 (see table below).

Big business interest in asset-based lending has grown almost constantly

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Jeff Longhurst, who took over as CEO of ABFA from Kate Sharp in April, says that asset-based finance has entered a ‘new era’ – representative of the fact that it is an everyday part of the ‘commercial finance toolkit’.

‘Financing tools like these have already been commonplace in the United States for a long time, and have played a key role in funding the recovery for a lot of business in sectors like manufacturing,’ he says.

‘We’re now seeing big British businesses following their lead, and using asset-based lending as a vital part of their growth plans.’

ABFA also believes that asset-based finance in the UK is becoming as popular as it is in the US, where it has served as a mainstream product for years.

‘There are general concerns about the availability of finance for businesses and the consequences this could have for the recovery,’ Longhurst adds.

‘The asset-based finance market in contrast – while it has grown sharply – still has unused capacity, and providers are actively looking to grow their lending books.’