According to new data released by the Asset Based Finance Association (ABFA) a record number of businesses are now using assets to raise cash.

The assets typically used by businesses to raise money include plant, machinery and real estate as firms are increasingly seeking better alternatives to bank loans and overdrafts. Funding that is secured against assets offers businesses an opportunity to borrow money at a cheaper rate because lending is secured. Assets can either be physical or loans can be secured against the outstanding debts owed to a business.

A total of £4.2bn was secured against assets by businesses in the UK, which represents a 9% increase on the £3.8bn recorded in 2014. The overall amount of funding secured by businesses through asset based financing stood at 19.3bn to the end of June 2015.

The figures indicate that businesses are embracing this innovative form of financing rather than relying on other more expensive and less secure forms of lending. While asset based finance can be used to help businesses that may be struggling with cash flow issues, it is also being used as a positive means of driving investment in future growth.

Asset based finance is not just restricted to areas such as real estate, plant and machinery it can also be used to borrow against more unusual assets such as IP and forward income.