Demand rising for asset-based loans

22/07/2010

According to a new study by Investec Specialist Private Bank, the continuing difficulties in accessing finance are forcing many companies to seek out asset-based loans and mezzanine finance.

The bank surveyed 48 serial entrepreneurs and discovered that 26 per cent were planning to use invoice discounting and other forms of asset-based loans at some point this year in order
to secure funds. A further 19 per cent of firms planned to use mezzanine finance.

A five-fold increase in enquiries regarding those forms of finance was noted by Investec Growth & Acquisition Finance during the first three months of this year, compared to the same period in 2009.

James Stirling, a director at Investec Growth & Acquisition Finance, said, “High quality deal flow in the private equity market is increasing and as a result of this we are seeing a significant rise in demand from this sector for asset based lending and mezzanine finance.”

A tiny six per cent of those surveyed reported that they expected access to finance to be easy over the coming year. More in keeping with the uncertain economic climate, 64 per cent said that they were expecting it to be tough to find finance.

Investec also reported that credit availability from high street banks will remain tight as those lenders that are still willing to lend remain extremely risk-averse as they focus on improving their own accounts.