‘I was not surprised to see new figures recently released showing that finance available through ‘asset based lending’ jumped to £4.3 billion in 2016 – an all time high and a 22 per cent increase on last year. Herein lies the future.
(PRWEB UK) 12 January 2017
Alternative lending, once viewed as murky or a last resort, is no longer ‘alternative.’
That’s the view of leading Leeds-based entrepreneur Matt Haycox following the publication of new figures from the Asset Based Funding Association (AFBA).
The ABFA explains that asset based lending allows businesses to borrow against a range of assets they already own, including inventory, property, machinery and intellectual property. And their research shows that the amount of finance available through ‘asset based lending’ to UK businesses reached a record high of £4.3 billion, up 22% in the last year.
Matt Haycox, a consultant for Access Commercial Finance, says that in an uncertain world, especially in light of Brexit, the demand for short, medium and longer term financing for small and medium sized businesses (SME’s) is going to become even more vital.
He says: ‘I was not surprised to see new figures recently released showing that finance available through ‘asset based lending’ jumped to £4.3 billion in 2016 – an all time high and a 22 per cent increase on last year. Herein lies the future. Without funding for small businesses, our economy and country will not continue to grow and flourish in the way we’d like it to.’
Haycox predicts a further boom in alternative lending. The entrepreneur, who blogs on his website matt-haycox.com believes that there is significant capacity for even more lending through alternative finance, and an increasing number of businesses are recognising this as a source of fast and flexible funding.
He says: ‘The rise of alternative finance has hugely benefited the SME sector and peer to business lenders and alternative balance sheet lenders are seeing the opportunity for higher returns, and are increasingly lending to this sector.’
He also believes that the government and financial regulator have given the alternative finance a helping hand.
Matt Haycox says: ‘The government is keen to encourage competition in banking, for the benefit of the economy, and consumers. The regulator has also, surprisingly, been a huge promoter of alternative finance. Unlike anywhere else in the world, the UK Financial Conduct Authority and the Prudential Regulatory Authority have a mandate to promote competition in addition to protecting consumers and keeping the financial system safe.’
In November this year, the Government also introduced the Bank Referral Scheme, compelling banks, through legislation, to refer loans to alternative lenders, where they were unlikely to finance it.
Haycox concludes: ‘In light of this, so called alternative lenders are becoming part of mainstream lending, and are competing for the same loans against banks and other larger lending institutions. Investors have realised the vital importance of adding this new asset class to a balanced investment portfolio. Returns on investment have outpaced traditional investments, especially if lenders dare to venture down the slightly riskier end of the credit spectrum.’
The alternative lending space is an exciting space to be in. It not only provides the opportunity for a higher return, but also presents an opportunity to directly benefit the economy. The growth in this market has been so huge that this form of lending is no longer “alternative” in nature.’