New figures from the Asset Based Finance Association show that the UK leads Europe in terms of asset-based finance use. Current market conditions suggest this position will only strengthen in the years ahead.

ABFA data show the UK accounted for 26% of the European asset-based finance market in 2015, well ahead of France (17%) and Germany (14%). The new research also reveals that asset-based finance use in Europe has risen to record levels, valued at £1.31 trillion in 2015. Use in the UK alone was
£335 billion in 2015, an increase of 7.4% over the previous year.

According to the association, invoice finance represents 80% of asset-based finance, with the remainder comprising asset finance. Invoice finance, asset finance and other non-bank finance services, such as peer-to-peer lending and crowdfunding, have offered SMEs a financial lifeline in recent years as traditional lenders have adopted a cautious position with regard to small business lending.

And as big banks continue with the same attitude towards SME finance and uncertain economic conditions affect markets, so the reliance on non-bank finance is set to grow. According to new figures from independent think tank Gorwel, only a small percentage of small businesses are prepared for further Brexit-bred turbulence.

Add in the pressure being exerted by meeting costs relating to auto-enrolment, cybersecurity, the living wage and reducing the skills shortage gap, and it is clear that maintaining cashflow and ensuring liquidity will be priorities for small business owners.

If the UK is to maintain its status as one of the world’s most entrepreneurial countries – it is ranked fifth according to the latest Ashish J Thakkar Global Entrepreneurship Index – ensuring access to start-up funding and small business finance amid unstable market conditions is vital. And with traditional lenders committed to caution, it is clear that the role of the non-bank finance sector will only continue to grow.

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