Business Finance Broker Simon Belton provides a round up of the biggest asset based lending developments in 2015

2015 was a challenging year for the UK Asset Based Lending industry. September 2015 statistics from the Asset Based Finance Association (ABFA) showed:

Although client advances were up 6% to £19bn over 2014, client numbers remained largely static at circa 44,000.

With circa 100 companies now providing Invoice and Asset Based Finance facilities and some of those already announcing redundancies, it is interesting to see that new funders are still looking to enter the market.

Here are my observations on the asset based lending market in 2015:

The Asset Based Lenders

It could be said that there are too many funders in the Asset Based Lending arena. Indeed it is almost impossible to differentiate between many of them in terms of credit appetite, pricing or service proposition.

Without growth in client numbers it is hard to envisage that some of the smaller companies will remain independent in the medium term.

ABFA statistics suggest that average deal size is creeping up. Some of the larger Asset Based Lenders have progressively dispensed with their small business offerings. Banks especially have been looking at the high headcount needed to service some Invoice Finance facilities.

High street bank asset based lenders still continue to dominate the sector, whether through direct lending to companies, or indirectly by funding some of the independents.

Peer-to-Peer Lenders

Peer-to-Peer lenders seem to be attracting companies who have never used invoice finance before, by taking a different view on risk. This has had an impact on some of the smaller Asset Based Lenders. Whilst this standpoint can be admired, it remains to be seen whether the credit appetite for this type of business finance will change once inevitable bad debts eventuate.


Asset Based Lending facility pricing was inconsistent in 2015. Some funders seemed intent on trying to maximise their return on the deals they were seeing, whilst others looked to buy business by offering low headline rates.

Set up and arrangement fees for smaller clients increased, but fee rates for larger clients remained attractive.

It also became apparent that high street banks were keen to win good quality business at whatever cost.

Selected Invoice and Single Debtor pricing remained relatively expensive, more so given that a number of the main Asset Based Lenders had a more relaxed view on ledger concentration.

Credit Appetite

Credit appetite has at times been difficult to gauge due to numerous factors including personnel and credit policy changes, as well as access to capital.

The high street banks again seemed to be very keen to lend. This had the effect of not only making them aggressive in winning business, but also made it clear they were keen to hold on to existing relationships that in the past may have been managed out.

Business Finance Products

In 2015, a number of the larger funders introduced new or complimentary products, such as Construction and Trade Finance. Concentration restrictions were also largely relaxed due to the emergence of Selected Invoice and Single Debtor products.

For larger and well-established companies, Cash Flow Loans and 100% Prepayments made a reappearance on the market.


Technology in the financial sector has been a hot topic over the last few years, although Asset Based Lenders don’t seem to have invested heavily in it.

In an industry with relatively complex and cumbersome products, technological solutions for assisting clients in providing and reporting information in a better way have yet to be found.

2016: The year ahead

The Asset Based Lenders have a strong desire to lend, but it is difficult to foresee the industry being able to support the growth aspirations of the approximate 100 funders in the market.

Whether this is still due to lack of recognition of Asset Based Lending products, or a more general lack of a desire for companies to take on additional borrowing, we don’t know.

This view is shared by Martin Bennison, Managing Director of Ultimate Construction Finance who says: “Whilst 2015 was a fantastic year which saw Ultimate Finance beating it’s new business targets by nearly 50%, there is no doubt that 2016 will be challenging. Those funders with a broad product range and a flexible can do attitude will be best placed to meet this challenge, as the market continues to evolve and will no doubt see further consolidation.”

Asset Based Lending offers a viable alternative to traditional bank facilities but the industry needs to work harder to simplify the products. Furthermore it needs to be more transparent about pricing and terms and conditions.

Business Finance Broker Simon BeltonAbout the Author: Director of Business Finance Broking Simon Belton has over 25 years experience in the Asset Based Lending sector. Simon brings with him a wealth of experience within the broking industry. He has also worked for a number of the leading financiers, both in the UK and internationally.

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