Asset-Based Lenders See Increased Credit Line Usage by U.S. Businesses

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Commercial Finance Association's 3Q ABL Index reveals utilization of credit lines by U.S. businesses increases for third consecutive quarter and new credit commitments jump 27% over same period in 2010.

The Commercial Finance Association (CFA) today released its Quarterly Asset Based Lending Index for the 3rd Quarter of 2011. The index, based on data provided by the Association’s 20 largest asset-based lenders, saw credit line utilization surpass 40% for the first time in nearly 3 years.

The survey results indicate that U.S. businesses are continuing to increase usage of their credit lines, a signal that business conditions are improving. In 3Q 2011, CFA members surveyed reported that asset-based credit line utilization was 40.5%. This marks the third consecutive quarter that utilization has increased and is the first time since 1Q 2009 that it has exceeded 40%. In addition, lenders' new credit commitments were 26.7% greater in the Third Quarter compared to the same quarter in 2010.

There were other signs that activity in the ABL sector continues to increase in the Third Quarter. Seventy percent of participating lenders reported positive growth in total credit commitments. Overall, total credit commitments grew by 1.5% compared to the previous quarter and by 5% over the same quarter in 2010.

“The continuing increase in credit line utilization through the first three quarters of this year indicates that businesses' capital needs are growing, albeit slowly. This is a positive sign for the economy,” said CFA Chief Executive Officer Andrej Suskavcevic. “The asset-based lending and factoring community will continue to be a source of working and growth capital for U.S. businesses of all sizes as we manage through these uncertain economic times. I would encourage businesses to use our free find a lender service if they have capital needs.” added Suskavcevic.

Businesses in need of financing are encouraged to utilize the CFA’s free online service, “Find a Lender,” by visiting http://www.cfa.com.

In another indication that the health of businesses are improving, The Quarterly Asset Based Lending Index also revealed significant improvements in portfolio performance among reporting lenders in the Third Quarter. Lenders’ non-accruing loans as a percentage of their total ABL portfolio fell by 34 basis points, with 70% of lenders polled reporting a decrease or the same level of non-accruals in 3Q 2011 compared to the previous quarter. With respect to gross write-offs, 70% of lenders also reported a decrease or the same level in the third quarter over the prior quarter.

The Quarterly Asset-Based Lending Index was conducted by R.S. Carmichael & Co., an independent market research firm, to measure business growth, credit commitment, credit line utilization and portfolio performance of the 20 largest CFA members engaged in asset-based lending. The survey was commissioned by the Commercial Finance Association. For a full copy of the survey, please contact Brian Cove at (212) 792-9390 or bcove(at)cfa(dot)com.

About CFA
Founded in 1944, the Commercial Finance Association is the trade group of the asset-based financial services industry, with nearly 300 member organizations throughout the U.S., Canada and around the world. Members include the asset-based lending arms of domestic and foreign commercial banks, small and large independent finance companies, hedge funds, private equity firms, floor plan financing organizations, factoring organizations and financing subsidiaries of major industrial corporations.

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Brian Cove
Commercial Finance Association
(212) 792-9390
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