Asset based finance to be included in new measures to broaden SMEs' access to finance
The Government's decision that banks must forward SMEs' unsuccessful loan applications to other potential finance providers, including asset based financiers, could deliver a major boost to small business funding in the UK, says the Asset Based Finance Association (ABFA), the body representing the asset based finance industry in the UK and the Republic of Ireland.
The ABFA says that by referring SMEs on to platforms that will connect them with other finance providers, the measures could enable more businesses to find the funding they need. 40 per cent of businesses give up on finding funding after being turned down by their banks, according to the Government's consultation paper on the topic.
The ABFA says that the Government's inclusion of asset based finance into the group of 'alternative finance providers' that will receive SME lending applications from banks means that businesses will benefit from access to highly experienced and well-established finance providers.
The value of business funding provided by ABFA members has risen by 29 per cent to £17.5 billion since the peak of the recession in 2009, while more traditional types of lending have fallen by 19 per cent over the same period.
Jeff Longhurst, Chief Executive of the ABFA, comments:
"Asset based finance is a key part of the tool-kit available to assist the cashflow of UK and Irish businesses. It's great to see the Government acknowledge that the industry is already making an enormous contribution to funding the economic recovery, and can make an even greater contribution in the future."
"We hope that these new measures will begin to close the knowledge gap that is preventing small businesses from accessing the funding ABFA members can provide. ABFA members have been providing finance to SMEs for over 50 years and currently fund more than 43,000 businesses with a combined turnover of £68 billion. But the industry is willing and able to support more businesses."