The data from the Asset Based Finance Association (ABFA) shows the total value of asset based finance in Europe also reached a record €1.47 trillion (£1.31 trillion) in 2015, with the UK now representing 26% of this market, up from 24% in 2014. By means of comparison, France represents 17% of the European market and Germany 14%.

Asset based finance, which is finance secured against a business’ assets such as their invoices, has become increasingly important as the regulatory landscape in Europe has made it harder for banks to substantially increase unsecured lending to businesses, especially SMEs, says the ABFA.

The organisation added that 80% of asset based finance is invoice finance, where businesses secure funding against their unpaid invoices, and the other 20% is asset based lending.

ABFA says most users of asset based finance across Europe have traditionally been small and medium sized enterprises. However, larger businesses are now waking up to the opportunities that asset based finance can bring for them. The total value of asset based finance used by large enterprises, defined as businesses with a turnover of more than €50m per annum, is now roughly the same as that of SMEs.

Jeff Longhurst, Chief Executive of ABFA, said: “UK businesses are pioneers of the use of asset based finance, which is becoming a very prominent feature of financial services in Europe.

“Asset based finance has long been a very important funding stream for SMEs but is increasingly used by businesses of all sizes throughout Europe.”

The growing popularity stems from the fact that the method can provide quick approvals and flexible terms to businesses, Longhurst continued. “This is because funding is secured against assets and businesses can scale up borrowing as the value of these assets grows, without having to negotiate new lending agreements.”

As well as seeing the highest total value of asset based finance in Europe last year, the UK also had the joint-highest GDP penetration ratio of 15%.

This figure represents the value of businesses supported by the method as a percentage of GDP and is an indication of the increasing use of this source of funding in the UK.

Jeff Longhurst added: “Asset based finance has become a key source of alternative funding for businesses in the UK and now other European countries are better exploiting the possibilities this source of finance offers.

“The UK remains at the forefront of an industry which is driving more and more investment by businesses in the largest trading bloc in the world.”