Tried and tested asset-based funders best placed to support SMEs through Brexit
The head of the UK’s largest independent invoice finance company, Bibby Financial Services (BFS), says the asset-based finance sector is best placed to support SMEs through the months and years ahead, due to its track-record of supporting businesses through periods of uncertainty.
David Postings’ comments come in the wake of wide-spread reports of declining SME confidence and a potential funding gap, following the UK’s vote to leave the EU on 23 June 2016.
David Postings, global chief executive of BFS, said:
“Amid talk of a potential funding gap in the UK following the referendum result and reports of some high-street lenders potentially retreating from the market, asset-based finance is again coming into its own.
“Unlike newer forms of funding, asset-based finance has consistently stepped into the breach in times of economic uncertainty, offering SMEs a sustainable and secure means of funding.”
According to the Asset Based Finance Association (ABFA), its members advanced more than £19bn to UK businesses at the end of Q2. David believes that the industry can now steal a march on other forms of finance, due to the way it provides funding against a business’s assets.
“Forms of funding such as invoice finance grow in line with a business’s sales ledger and this means that SMEs don’t have to take-on additional debt to grow. This provides an opportunity for asset-based funders to step in, at a time where many SMEs will be reluctant to take on debt and when high-street lenders may be looking to reduce their exposure to the SME market.
“A huge advantage asset-based funding has over other forms of finance is the visibility of debt being funded. This enables us to get under the bonnet of a business, allowing us to tailor funding to individual needs, often providing greater levels of funding than an overdraft or loan, for instance.
“Another key advantage in the current climate is that our funding capability isn’t based on individual private investor confidence. Therefore, while some online lenders will be hit by falling investor confidence and banks recalibrate their offer in this new environment, we’re highly capitalised, open for business and ready to continue to support SMEs.”
Part of the 208-year-old family business, the Bibby Line Group, BFS supports 9,500 SMEs globally through its range of funding options. Its financing solutions include invoice discounting, factoring, trade, export finance and foreign exchange.
BFS recorded its best month since August 2012 in June 2016, when it advanced more than £432m in funding to businesses.
More than a quarter of SMEs (27%) say that the uncertain economic environment within the UK is causing them to hold back on investment, with the proportion of businesses expecting growth falling, according to BFS’ latest SME Confidence Tracker.