By Daniel Hunter
Underpinning the UK’s economic recovery, the Asset Based Finance Association has announced new quarterly figures which show the highest levels of advances to companies since 2008. This is in marked contrast to overall UK net lending figures which continue to fall.
The new figures (for quarter 2, April — June 2013) show that total funding advanced by the ABFA’s members to firms has leapt 10% year on year, the balance rising from £15.8bn to £17.4bn (June 2012 — June 2013). This is the highest balance of advances since September 2008 and only the third time this has topped £17bn.
Total funding available has also seen a healthy increase of 14% year on year. In combination both sets of figures show that firms which use asset based finance are feeling more confident in arranging new funding lines and have higher levels of demand to actually access the finance. It also highlights the growing need for asset based finance within the UK economy, as wider net lending fell by 3.5% in the 12 months to June 2013, marking the biggest fall in net lending since June 2012.
Sales from firms using asset based finance have also risen markedly, reaching £131.2bn in June 2013, a rise of some 12% in the past year. The levels of stock held as assets have also risen by a massive 24%, suggesting that firms using asset based finance are using the increased funding to raise stock levels in line with rising consumer demand for goods.
The figures also paint a convincing picture of rising export demand, with both export factoring and export invoice discounting seeing growth of 28% and 13% respectively. This indicates that as both the EU and America, the UK’s two largest trading partners, continue their own recovery, companies are taking advantage of this and working hard to raise sales through exports.
Both small and large companies are enjoying the rising confidence, with advances to small firms (£500K — 1m t/o) recording 6.2% growth in the last quarter alone, whilst larger companies (£50m - £100m t/o) have similarly seen growth in advances of some 14.3%. This shows the clear strength of asset based finance as it suits growing companies, both large and small.
Kate Sharp, chief executive of the Asset Based Finance Association, said: “All of the figures show rising demand and a much more confident approach from companies using asset based finance, taking advantage of the additional opportunities the growing economy presents. What is still surprising though is that these figures contrast so much with the wider UK net lending figures which continue to fall. UK firms need access to finance to grow and succeed and the asset based finance sector is playing an ever more critical role in the supply of this funding.”