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Credit crunch boosts asset-based lending

By Nick Britton on July 02 2008

The popularity of asset-based lending (ABL) has soared, according to a survey of accountants from business lender Venture Finance. Some 52 per cent of respondents claim that ABL is now attractive to their clients, compared with just two per cent who made the same statement last year.

Interest in invoice finance has grown over the same period, from three per cent to 29 per cent.

The results suggest that the drying up of traditional lines of credit, such as bank overdrafts, is increasing the popularity of alternative sources of finance, according to Peter Ewen, managing director of Venture Finance.

Ewen observes: ‘While the popularity of bank loans has remained static, our research supports the notion that the tightening of business credit is forcing businesses to look around for other ways of raising funds.’

According to figures from the Asset-Based Finance Association, the ABL industry saw 30 per cent growth in 2007 in terms of cash advances. In comparison, bank overdraft lending to small and medium-sized enterprises has declined by more than half since 1992 to under £10 billion, according to data from the British Banking Association.

Venture Finance polled 101 UK-based accountants for its survey.

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