The Asset-Based Finance Association (ABFA) reports that a record number of small UK businesses are using ABF, with an increase of 38 percent being seen since the height of the recession. This suggests that the economy has played a major role in the evolving behaviours of SMEs. What we’re seeing is more businesses – particularly young companies and start ups – turning to alternative business finance products such as ABF and peer-to-peer lending because securing business loans from high street banks has become much more of a challenge.
Asset-based financing is believed to have gained so much traction as an alternative financing product for businesses because the concept is familiar and fairly well established. Working in much the same way as a home mortgage, businesses can choose to offer property or equipment as collateral, enabling lenders to provide quick access to funds that can be used to grow and develop the brand.
Benefits of ABF (Asset Based Financing)
So just why are small UK businesses falling head over heels for asset-based financing? As with other types of alternative business finance, there are many benefits that business can enjoy with these financial products that are typically not available through taking out a traditional business loan:
- Increased Cash Flow – 46 percent of small businesses cite an increase in cash flow as a major benefit of ABF. By offering property or equipment as collateral, businesses can enjoy quick access to cash that allows them to grab growth and development opportunities as they arise.
- Flexible Repayment Terms – 42 percent of small businesses say that the option to spread payments to suit predicted sales forecasts is a major advantage of ABF. With less formal arrangements, businesses can find ABF offers that meet their individual requirements.
Addressing the Knowledge Gap
Unfortunately, despite the growth we’ve seen in asset-based lending over the past few years, alternative business finance is still an unknown to many businesses. ‘Attitudes to Business Development’ – a study by Lombard – shows that around one third of businesses would be more open to the idea of using ABF is they had more information available to them regarding these types of non-traditional business loans. If you’re interested in discovering what level of financing is available for your company, compare business finance online now with compareyourbusinesscosts.com. The easy-to-use online comparison tool helps you to identify the best providers for your needs.