Few SMEs aware of beneficial asset based funding
Too few SMEs are aware of how asset based funding could accelerate their growth, Close Brothers has warned.
The merchant and corporate bank suggests that whilst many SMEs are increasingly confident about their prospects for the year ahead, lack of access to funding holds them back.
Data from the Asset Based Finance Association shows that asset based lenders made record sales during the final quarter of 2016, with £79.3bn worth of facilities agreed with clients.
SMEs and other borrower had asset based finance balances outstanding of £22.2bn at the end of 2016, which is a 13% year-on-year increase.
David Thomson, chief executive of invoice finance and rentals division at Close Brothers, said: “Funding such as invoice finance and other types of asset based lending can provide crucial capital as businesses seek to invest for their future and the increased sales of these products reflects growing confidence amongst SMEs.
“However, our own research suggests that while awareness of this type of funding has increased in recent times, many businesses still don’t understand the opportunities available to them.”
The Business Barometer research produced by Close Brothers also suggested that 72% of businesses are currently unaware of finance options based on turnover rather than credit rating.
The research also showed that only 44% would consider asset-based lending over a loan or overdraft.
This comes after surveys recently published by the Federation of Small Business and the British Chamber of Commerce suggested that SME confidence about the year ahead has improved.
Thomson added: “Asset-based finance provides growing SMEs with a scalable funding stream that is appropriate to their individual circumstances, offering vital headroom as they explore new opportunities.
“Record sales of such products are therefore to be welcomed, but our research suggests many more SMEs could benefit from looking beyond the traditional options for funding.”