Invoice finance and asset based lending for UK and Irish businesses hit a record high of £20bn (27.9bn) in Q3 2015.
This was a 4% growth compared to the same period in the previous year, when funding to SMEs through these finance routes stood at £19.3bn.
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The ABFA explained that 80% of asset based finance was invoice finance, while the other 20% represented the ‘fast-growing area’ of asset based lending.
The association said the growing popularity of asset based finance stemmed from its accessibility to the vast majority of UK and Irish businesses that have assets such as unpaid invoices against which they can borrow.
Jeff Longhurst, chief executive of the ABFA, said: "UK businesses are keen to invest for growth and are looking to their existing assets to unlock the funding they need to achieve it. More and more businesses see unpaid invoices, plant and machinery as a potential source of finance rather than an impediment to cash flow. In addition, with asset based finance, the funds available track the growth in the business so senior management can focus on what they do best – running the business.
"It is vital that UK businesses are making best use of their existing assets to take advantage of the healthy pace of growth in the UK economy, in order to maximise their own growth."
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