Running Against the Tide: Asset-Based Lenders Thrive Despite Credit Crisis

Business Wire, July 7, 2008

Asset-Based lending industry grows by more than 11 percent; surpasses $500 billion milestone

NEW YORK -- The Commercial Finance Association (CFA) today released its "2007 Asset-Based Lending and Factoring Surveys," revealing significant increases in outstanding loan volume within both industries. Specifically:

* The asset-based lending industry continued its evolution as a mainstream lending option, growing by more than 11 percent and reaching $545 billion in outstanding loans.

* Factoring volume grew to $135 billion in 2007, a 6.5 percent increase over 2006.

"There is no denying that asset-based lending and factoring have found their home as mainstream options for businesses in need of credit," said Andrej Suskavcevic, CEO, Commercial Finance Association. "Our members fill an important gap in tumultuous credit environments. These findings prove that companies are still able to obtain financing to meet their needs, and they're doing it by utilizing their assets--ranging from accounts receivable and inventory to intellectual property, equipment and real estate--as collateral. While the current 'credit crunch' has forced many lenders to take a more cautionary approach, CFA member companies are not encumbered by tighter constraints which ultimately limit their ability to provide funding to businesses."

The top three industries utilizing asset-based lending in 2007 were retail, steel and food. However, these industries collectively represent less than a quarter of total outstanding loans, highlighting asset-based lending's relevance to a variety of industries. In terms of geography, the Northeast region represented 25 percent of outstanding loans, followed by 23 percent in the Southeast, 22 percent in the Midwest, 18 percent in the West and 12 percent in the Southwest.

"The industries using asset-based lending and factoring have become more diverse over the past few years, and our members are reaching new industries on a regular basis," said Suskavcevic. "This, coupled with our consistent penetration throughout all parts of the country, confirms our members' relevance to the business community at-large."

Total asset based loans outstanding were $489 billion in 2006, $420 billion in 2005, $362.1 billion in 2004 and $334.1 billion in 2003.

2007 factoring growth was more consistent with years past, and continued its historical industry and geographic focus. The textile/apparel market represented 54 percent of factoring activity in 2007, with the heaviest concentration in the Northeast (49 percent).

"Similar to asset-based lending, factoring is becoming a recognized financing option that is continuously gaining prominence in the U.S.," said Suskavcevic. "Given the current credit crunch, factoring provides businesses with access to cash when traditional sources of credit are disappearing, allowing them to grow and run their businesses."

The Annual Asset-Based Lending and Factoring Survey 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 asset-based lending and factoring industries.

For a full copy of the survey, or to interview a CFA executive, please contact Mike Trainor, The Castle Group, at 617-337-9534 or Mtrainor@thecastlegrp.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.