to quote the article:
" So wary are Britain's five million SMEs that the report revealed they are bypassing their banks entirely and resorting to alternative finance such as invoice factoring. This type of facility has a number of advantages over an overdraft for both the bank/asset-based lender and the company.
• The facility is linked to sales and not the balance sheet or performance of the business. As sales increase the facility is flexible and will grow with the business.
• The facility will be contracted for a fixed period giving a business stability, unlike an overdraft which is always repayable on demand.
• The perceived risk of the facility to the lender is much lower as borrowing is secured against an asset (the sales invoice); as a result the level of security required is reduced when compared with the requirements for an overdraft.
• ABL facilities can normally be approved in a matter of days and implemented very quickly, in most cases far quicker than implementing an overdraft with its security requirements.
• Although the total charges on an ABL facility may be higher than an overdraft, most businesses are convinced that the level of flexibility and reduced security requirements are valuable benefits worth paying for.
For a growing business that needs working capital to expand it is clear that asset-based lending provides a real alternative. The stigma around seems to have gone. At a time when overdrafts are increasingly difficult to obtain or even retain, it seems the once poor relation could be a business owner's best friend."