ABFA Q3 stats show asset-backed finance providing timely
support to SMEs.


Even with economic growth stagnating and UK businesses placing
more emphasis on stability, asset-based finance (ABF) users have
reported impressive growth in the last quarter. This growth has
been consistent over the past year, and highlights the benefits of
such flexible forms of finance.

The latest figures from the Asset
Based Finance Association (ABFA) found that sales from members’
clients rose annually by 16% during Q3 2011, surpassing £60bn
(€71bn) for the first time in the industry’s history.

Interestingly, total advances by
ABFA members rose by 9% over the same period to £16bn, providing a
sharp contrast to wider bank lending, which has steadily declined
since April 2009. Indeed, lending to private non-financial
companies during the 12 months to the end of September 2011 fell by
2.3% on an annual basis.

This variation would have been even
more exaggerated had asset-based finance users chosen to utilise
the full £23.2bn that was available to them, with many instead
remaining cautious given the economic outlook.

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Late payment remains an issue
hindering SMEs and bad debts are on the rise. The threat of the
latter is real and the shield provided by ABFA members is
demonstrated by the level of credit protection payments made to
their clients climbing to £7m during Q3 2011, a 43% increase from
the previous quarter. Encouragingly, asset based finance users are
sensibly opting for non-recourse facilities that incorporate bad
debt provision, as demonstrated by a year-on-year rise of 21%.

With SMEs facing difficulties in
accessing traditional bank finance, asset-based finance continues
to support and fill the funding gap. It’s great to see client sales
exceeding £60bn – running a business is arguably harder than ever
given the economic climate, so this landmark is an achievement for
ABF clients.

Our task as an independent
commercial finance broker remains to continue instilling the
virtues of such effective options that are at the disposal of
businesses. By working closely with our funding partners, we can
communicate this vital message that the asset-based finance
industry is here to support the recovery and growth of our

Evette Orams is managing
director of Hilton-Baird Financial Solutions