Daily News: March 1, 2012

CFA ABL Index Finds More U.S. Businesses Sought Credit in Q4/11

The Commercial Finance Association (CFA) released its Quarterly Asset-Based Lending Index for the fourth quarter of 2011. The index, based on data provided by the association’s 22 largest asset-based lenders, reveals a sharp rise in new lending and healthier portfolios for lenders.

The survey results indicate that more U.S. businesses are seeking capital. CFA members surveyed reported that new credit commitments originated in the fourth quarter of 2011 were 8.4% higher than the third quarter and 18.4% higher than were reported in the fourth quarter of 2010.

Further evidence that U.S. business are in need of more financing can be seen in the Q4 ABL Index’s finding that total asset-based credit commitments rose by 3.2% in the fourth quarter, compared to the previous quarter, with 76% of responding lenders reporting an increase in total committed credit lines.

“The considerable growth in new credit commitments in the fourth quarter is another encouraging sign that businesses are growing more confident about the economy and seeking capital to meet their needs,” said CFA chief operating officer Brian Cove. “As we have maintained throughout the recession and credit crisis, and the ensuing recovery, the asset-based lenders and factors that comprise the CFA membership will continue to lead the way as a primary source of working and growth capital for U.S. businesses as the economy continues to move in a positive direction,” added Cove.

In another indication that the commercial lending environment is improving, the index found that 43% of respondents reported a decrease in net write-offs in the fourth quarter, compared to 28% in the third quarter. Only 9% of lenders reported an increase in net write-offs. Gross write-offs as a percentage of total outstandings also declined in the 4th Quarter, falling well below 100 basis points.

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 22 largest CFA members engaged in asset-based lending. The Commercial Finance Association commissioned the survey.