Brokers have an opportunity to deliver more
asset based finance solutions for SME’s in a market where bank
loans are in short supply, writes Hilton Baird’s Evette
Orams.
The latest figures from the Asset Based
Finance Association (ABFA), which collected the data from 41of its
members and associates from the UK and Ireland to produce the
report, deliver encouraging news for asset based finance users.
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This is in sharp contrast to the broader
picture, which indicates that funding is still in short supply for
SMEs.
The ABFA reports that invoice finance saw
encouraging developments during the 12 months to the end of 31
March 2011, with advances from its members to clients rising by 9%
year-on-year to £14.8 billion. 
This includes a 12% rise in advances against
pure invoice finance facilities, in addition to a staggering 87%
rise in advances made against plant and machinery in wider asset
based lending facilities.
Credit in the form of bank overdrafts and
loans is proving more difficult to obtain than in previous times,
as evidenced by a report from the Department for Business,
Innovation and Skills (BIS) which shows the annual rate of growth
in bank lending to SMEs fell to -3% in February.
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By GlobalDataIt has therefore been important that brokers
have continued to identify alternative solutions for businesses,
accurately matching their funding needs with the right facility for
a variety of business requirements.
The need for support from commercial finance
brokers to help businesses secure suitable finance has increased
over the last two to three years, mainly because business owners
are looking at newer forms of finance where perhaps traditional
routes are falling short. The emphasis is now on flexibility given
the volatile trading conditions.
Interestingly, the fall in bank lending has
increasingly been filled over the past year through asset based
finance as business
es of all sizes look for alternative means to secure
affordable finance.
Furthermore, these forms of funding are
demonstrating considerable success at helping clients –
particularly SMEs – to grow by enabling them to utilise their
increased cash flow to ride out the tougher times and encourage
growth. Clients’ sales have increased by a significant 15% to £55.9
billion over this period, suggesting that such targeted funding can
be hugely beneficial for SMEs.
Even more encouraging is the fact that,
according to the ABFA statistics, these funding solutions are
available to businesses of all sizes, with more than half of its
members’ clients having a turnover of less than £1 million per
year.
These latest findings from the ABFA are very
encouraging and show that SMEs are considering more of the options
available to them.
This is important and to be encouraged in an
environment where traditional funding is less accessible.
An independent commercial finance broker
should help its clients assess their funding needs and the most
suitable options available to them in the market to match their
current and medium-term needs.
“In a more challenging environment the correct
form of funding can allow a business to suitably counteract cash
flow pressures they may encounter, while allowing their business to
grow. Both invoice and asset finance options are more flexible than
traditional finance for business and offer flexibility and
affordability for SMEs.”
Evette Orams is managing director of
Hilton-Baird Financial Solutions
