- 11 February 2016
- Posted by: Lucinda
- Categories: alternative finance, asset based lending (ABL), Invoice Finance, working capital finance
Asset Based Funding to Irish SMEs hits an all-time high
Asset based finance is finally gaining a foothold in the Irish market, with the news that asset based finance for UK and Irish businesses has hit a record high of £20 billion.
A recent report from the Asset Based Finance Association (ABFA), the body that represents the asset based finance industry in the UK and Ireland, says that funding secured against invoices and other assets has increased by 4% in the year up to December 2015, up from £19.3 billion the previous year. This is the first time asset based finance has reached the magic figure of £20 billion, as more businesses realise the benefits of using these alternative forms of finance to generate working capital.
According to the ABFA, 80% of asset based finance secured by businesses is in the form of invoice finance, which releases funds against a company’s unpaid invoices, while the other 20% represents the fast-growing area of asset based lending (ABL).
ABL enables a business to secure cash from their debtors’ ledger, and also generate additional funding from other assets such as stock, plant and equipment and property. ABL is ideal for companies looking to fund acquisitions, or buy-outs, and it is also a popular option for businesses that want to restructure or refinance debt.
Although ABL is hugely popular in the UK and widely available, there are only a few funders offering ABL in Ireland at the moment. No doubt this will change over time.
As the economy continues to improve and business owners are looking to expand and invest, they want to ensure they can access the finance needed to fund this growth. Although the banks are lending again, many businesses fall outside their lending criteria. For business owners looking to re-build their balance-sheet, and embrace growth opportunities, asset based finance might be just the perfect solution.