Small and medium sized enterprises (SMEs) lack information about the benefits of asset based lending according to a study by Close Brothers.
Almost three quarters of SMEs did not know it was possible to secure finance on the basis of their turnover, rather than their credit rating.
Two-thirds of SMEs said a bank loan or overdraft was their preferred solution and just 16% named asset-based lending over a loan or overdraft as their ideal form of business finance.
David Thomson, chief executive at Close Brothers Invoice Finance, said: “The findings of our research are disappointing because for many SMEs, asset based lending offers key benefits over other types of finance, including greater flexibility, fewer covenants, scalability and ease of access.
“We know that a lack of access to finance is a real barrier to growth for many businesses with huge drive and ambition, but the secret to securing this funding is often to be found in the assets the business has.
“If SMEs were better informed about how asset based lending works, many more would put it to good use in their businesses.”