Asset-Based Lenders See Increase in Demand and Usage of Credit by U.S. Businesses in 2nd Quarter

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Lenders report solid increase in new credit commitments and credit line utilization.

The Commercial Finance Association (CFA) today released its Quarterly Asset Based Lending Index for the 2nd Quarter of 2011. The index, based on data provided by the Association’s 20 largest asset-based lenders, saw a sharp increase in demand for new credit by U.S. businesses.

The survey results reveal several positive signs for the ABL sector. Participating lenders’ new credit commitments originated in the second-quarter of 2011 grew by 8.2% over the prior quarter. Moreover, 47% of lenders reported an increase in new credit commitments in the quarter. There was also significant movement on credit line utilization, with utilization rising to 39.6% in the quarter, compared to 37.1% in the previous quarter. Overall, lenders reported that total committed credit lines increased by 0.8% compared to the first quarter and were up by 2.0% versus the 2nd Quarter of 2010.

“The results of the CFA’s ABL Index for the second quarter are encouraging, both for the economy overall and for asset-based lenders,” said CFA Chief Executive Officer Andrej Suskavcevic. “Growth in new credit commitments and credit line utilization show that businesses are starting to need more capital but there is still a healthy dose of caution in the market given the political and economic instability around the world.” 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.

The Quarterly Asset Based Lending Index also revealed significant improvements in portfolio performance among reporting lenders, with non-accruing loans as a total percentage of ABL outstandings declining by 12 basis points in the Second Quarter, continuing the trend for the fourth straight quarter. Forty-two percent of lenders surveyed reported a decrease in non-accruals in the quarter. In another indication of improved portfolio quality, 79% of lenders reported either a decrease or the same level of net write-offs compared to the First Quarter of 2011.

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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