The popularity of invoice financing has pushed such lending to £711 million in the first quarter of 2016, according to the Asset Based Finance Association (ABFA).
Small businesses across the UK are rapidly turning to invoice financing, which enables a company to borrow against unpaid invoices, in order to enact growth plans, boost cashflow and expand their order books. In part, the rise in invoice financing has been a direct response to more traditional lenders being ever more reluctant to lend to small companies.
As a result, invoice financing across the UK rose 63% in the first quarter of 2016 to £711 million compared to the same period in 2015 – when invoice financing accounted for £435m. On average, small businesses borrowed £52,000 against unpaid invoices in Q1 2016, up from an average £32,000 in Q1 2015.
Other forms of alternative financing include asset financing, where firms borrow against their inventory, property and machinery, for example. However, of all asset-based financing recorded in the quarter, invoice financing accounted for around 80%, according to the ABFA.
Security may be required. Product fees may apply.