The amount of finance advanced to the UK’s smallest businesses through invoice finance jumped by over 60% in the last year, reaching £711m up from £435m the previous year.
The Asset Based Finance Association (ABFA) says the amount of finance advanced to the UK’s smaller businesses is the highest year on year boost since the recession, as businesses increasingly shift away from more ‘traditional’ types of finance and turn to invoice finance to help finance their business growth.
Smaller businesses using invoice finance received an average of £52,000 in invoice finance in Q1 of 2016, up over 60% from an average of £32,000 in the same period the previous year, to help them grow and develop their businesses.
ABFA chief executive Jeff Longhurst says that invoice finance is now one of the primary ways that small businesses access funding.
Longhurst says: “Since the credit crunch accessing funding through traditional paths such as business loans has remained challenging for smaller businesses, and so the flexibility of finance options, competitive prices and the quick turnaround of decisions associated with invoice finance is a real draw for these businesses.”
“Whether small businesses need capital for growth plans, to expand order books or to boost cashflow in order to help manage the risk of bad debts – borrowing against unpaid invoices can be an effective means to achieve these goals.”