A Recent CFA study shows that asset based lenders play a critical role in providing the financing businesses need to stay afloat and grow through tough times.  Often, businesses experiencing a rough patch or rapid growth cannot qualify for a conventional bank loan. In this case, an asset based loan can be a viable alternative.  Asset based financing can be a lifeline at a critical juncture, providing the needed capital to help struggling businesses move forward on stronger footing.

Source: abfjournal.com, Thursday February 17, 2011

CFA: ABLs Play Key Role in Economic Turnaround for U.S. Businesses

The Commercial Finance Association released its Quarterly Asset-Based Lending Index, Q4 2010, which revealed dramatic growth in new credit commitments and showed significant improvement in portfolio performance, with non-accruing loans dropping sharply. The index revealed:

• New credit commitments among asset-based lenders increased by 13.2% in the fourth quarter
• Fifty-five percent of reporting asset-based lenders report an increase in new credit commitments
• Lenders’ non-accruing loans as a percentage of their total asset-based loans outstanding decreased 46 basis points in the fourth quarter, with 50% of lenders reporting a decrease in non-accruals
• Sixty percent of lenders reported either a decrease of the same level of net write-offs in the fourth quarter compared to the previous quarter

“The signs of increased economic activity we saw in the previous quarter clearly picked up steam as the year ended and the results of the fourth quarter ABL Index show that asset-based lenders are playing a critical role in providing the capital businesses need to meet their needs as the economy grows,” said Andrej Suskavcevic, CEO, Commercial Finance Association. “Asset-based lenders provided a life-line to borrowers during the recession and now will play an equally important role in helping those same businesses grow and prosper in the months and years ahead.”

The Quarterly Asset-Based Lending Index was conducted by R.S. Carmichael & Co., an independent market research firm, to measure business growth, credit commitment, credit line utilization and portfolio performance of the 20 largest CFA members engaged in asset based financing. The survey was commissioned by the Commercial Finance Association.