New figures from the Asset Based Finance Association (ABFA) show members’ clients have sufficient funds in place and are even actively choosing not to access all the finance available to them. These figures contrast sharply with wider bank lending which has continued to contract, with loans to UK businesses falling by 3.9% in the past year alone.
The total funding available to companies as asset-based finance is £20.1bn, however total advances from members this quarter is £14.9bn. The utilisation rate of available supply is therefore 74.1%, with a further £5.2bn of finance available to them and approved for use. The total facilities agreed in 4Q10, which could be regarded as an upper limit on the funding available if growth in turnover occurs, was £28.6bn.
This means that if sales and orders for companies using invoice finance continue to expand, as many firms are reporting, then a further £13.6bn of asset-based finance could be available to them.
ABFA released the figures in a new economic report that summarises the industry’s growth and general credit conditions. The report highlights that much of the funding available is offered to small and medium-sized enterprises (SMEs); over half of the businesses receiving asset based finance have a turnover below £1m and a further 34% are medium-sized. Together, SMEs receive over £4bn in advances from ABFA members.
The ABFA recently announced total lending has grown by 8% in the past year, with advances from members at the year-end totalling £14.9bn. Turnover from companies using invoice finance this quarter also showed a healthy rise of 12% with annualised figures hitting a pre-recession record level of £212.2bn.
Kate Sharp, chief executive officer (CEO) of the ABFA, said: “These new figures show that clients which use invoice finance have enough bank finance for their needs, indeed they have a considerable amount more they could be accessing. This says to me that they are being cautiously prudent and growing their businesses using this finance when it is appropriate to do so. With the majority of advances going to SMEs, it’s clear that invoice finance is the ideal funding route for businesses which need to access more capital. With credit protection payments falling and debtor days shortening, these figures would suggest that pre-recession industry growth is returning.”
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