A new survey by Time Finance has highlighted that asset-based lending (ABL) remains significantly underutilised, with just 19% of UK SMEs making use of the finance solution, despite 64% of businesses being aware of it.

The findings come from Time Finance’s Finance Apathy survey, conducted in partnership with Censuswide, which explored attitudes towards business finance among 500 SME owners and decision-makers. While awareness of ABL is relatively high, the data suggests that many businesses do not fully understand how the solution can be applied to their financial planning.

ABL allows companies to unlock capital tied up in existing assets, offering greater flexibility compared to traditional lending.

BUSINESSES MISSING OUT

Phil Chesham, managing director of invoice finance at Time Finance, argues that ABL remains underused despite its versatility.

“Asset-based lending is one of the most creative finance solutions available to businesses, as it allows them to access capital tied up in their existing assets,” Chesham said.

“Used alongside more traditional finance options, such as loans, ABL can be packaged into a multi-product solution that expands a business’s funding capacity and potential for growth.”

The survey results suggest a disconnect between awareness and adoption, with Chesham adding that many SMEs may not fully appreciate how ABL could be applied to their businesses.

“Many businesses assume they will only be eligible for one type of funding, such as invoice finance. However, by taking a more detailed look at their financial position and assets, a multi-product deal can be structured to unlock more capital. We want to work closely with our broker partners to raise awareness of ABL as a funding solution for businesses looking to grow.”

“ABSOLUTE SENSE”

One recent ABL deal completed by Time Finance involved Birmingham-based printing company, Set & Match, which used a combination of a £70,000 invoice finance facility and a £70,000 secured loan to complete a management buyout.

Stuart Mills, managing director of Set & Match, acknowledged that ABL was not a funding option he had previously considered, despite two decades of business ownership.

“ABL is not a funding solution that I had come across, even as a business owner for over 20 years. But it makes absolute sense to me to utilise the assets that already exist within the business. It has created a funding solution that is flexible and has allowed me to complete my share purchase while continuing to fund and grow the company,” Mills said.