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Asset-Based Lending Activity Increases in First Quarter as Business Demand for Credit Grows

Asset-Based Lending Activity Increases in First Quarter as Business Demand for Credit Grows

The quarterly report recently released by the Commercial Finance Association, underscores the rising need for business credit.  With all data in from those lenders surveyed, the CFA attributes this increase in credit needs to a rise in the economy.  Their assertion is that as businesses emerge from the economic slowdown of the last few years, their need for capital has and will continue to increase.

On face value, this is surely one possible explaination.  Could another contributing factor to the rise in the demand for asset based lenders be that traditional bank pockets are still tightly shut?  Any business that is struggling or growing rapidly will be in need of working capital.  Often, they turn to asset based loans as an alternative when the bank says, “no.”

Growth in credit line utilization and outstandings highlight First Quarter for reporting asset-based lenders

New York, NY (PRWEB) May 26, 2011

The Commercial Finance Association (CFA) today released its Quarterly Asset Based Lending Index for the First Quarter of 2011. The index, based on data provided by the Association’s 19 largest asset-based lenders, indicates that borrowers’ credit needs are increasing as the economy continues to improve.

Total committed credit lines in 1Q 2011 increased 0.8% compared to 4Q 2010, according to the data providing by responding lenders. Compared to 1Q 2010, total credit commitments were up by 1.2%. Credit line utilization increased to 36.9% in the quarter, an increase of .7% over the previous quarter and total outstandings grew by 5%. In addition, lenders’ new credit commitments originated in the first-quarter of 2011 were level with the prior quarter. However, 68% of lenders reported an increase in new credit commitments in the quarter.

“These numbers illustrate the continued steady improvement in the economy”, said CFA Chief Executive Officer Andrej Suskavcevic. “As U.S. businesses continue to emerge from the economic slowdown of the last few years, their needs for capital will continue to increase and asset-based lenders will continue to lead the way in providing critical working capital to American businesses of all types and sizes, added Suskavcevic.

Businesses in need of financing are encouraged to utilize the CFA’s free online service, “Find a Lender,” by visiting

The Quarterly Asset Based Lending Index also revealed significant improvements in portfolio performance among reporting lenders, with non-accruing loans as a total percentage of ABL outstandings declining by 42 basis points in the First Quarter. Forty-seven percent of lenders surveyed reported a decrease in non-accruals in the quarter. In another indication of improved portfolio quality, 84% of lenders reported either a decrease or the same level of net write-offs compared to the Fourth Quarter of 2010.

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 lending. The survey was commissioned by the Commercial Finance Association. For a full copy of the survey, please contact Brian Cove at (212) 792-9390 or bcove(at)cfa(dot)com.

About CFA
Founded in 1944, the Commercial Finance Association is the trade group of the asset-based financial services industry, with nearly 300 member organizations throughout the U.S., Canada and around the world. Members include the asset-based lending arms of domestic and foreign commercial banks, small and large independent finance companies, hedge funds, private equity firms, floor plan financing organizations, factoring organizations and financing subsidiaries of major industrial corporations