Centric Commercial Future has issued a report saying that UK small to medium sized businesses are failing to take advantage of a lending gap which the Centre for Economics and Business Research is putting at around £30 billion.
Commercial finance, according to the report, is available to over 650,000 UK businesses. Commercial finance is a form of asset based lending which includes the discounting of invoices. By using this type of financing, companies are able to draw funds from machinery, stock and other company property. The trade body for the sector has said that the utilisation of this kind of lending is much lower than it could be.
The chief executive of Centric is John Onslow and he has commented, “The Bank of England said in their last Credit Condition Survey that there was a great difference between the amount of lending that was available to small businesses and the amount that they were actually taking advantage of. Many companies are not taking advantage of asset based lending and if they did so they might find that it could be very advantageous to them.”
Despite this general under-utilisation of asset based lending, the overall amount has increased since the start of the financial crisis. Since 2000 the amount of lending that has been asset based has doubled. Onslow also said that, “Asset based lending is a place that manufacturers can turn to if they have been turned down lending for another reason. This can be extremely useful if they need investment into the business but cannot find it elsewhere.”
Charles Davis, an economist has said, “This type of lending is a viable option for small and medium sized enterprises and if they are to use it then they will need to become well informed about how it works.”