Over two thirds (68%) of commercial finance brokers have seen little to no significant change in appetite among lenders to fund soft assets, Asset Advantage has found.

These soft assets include software, telecoms equipment, office furniture or soft furnishings.

The firm’s latest survey data, which looked at the changing demands in the commercial finance market, also revealed that one in five (20%) brokers said that conditions have worsened.

Compared to hard assets, such as machinery, vehicles and heavy equipment, soft assets are considered less secure due to their lower residual value.

Despite this, they generally include business critical equipment, yet brokers continue to face difficulties in finding appetite among funders.

As part of the survey, one broker said: "Similar appetite to fund soft assets in the market, in fact it has not seemed to have changed much over the last 10 years."

Another added: "Funders are becoming more specific on the assets they will fund and this naturally moves the range of assets away from soft. Only a few consider soft assets and their balance sheets have to be robust."

The aim of the survey was to uncover the key challenges facing brokers when securing funding for clients, as well as their thoughts on lender appetite and the lending landscape.

Credit and risk director at Asset Advantage, Philip Knight, said: "Soft assets can sometimes be challenging for brokers to fund and our latest data shows that it doesn’t seem to be getting any easier. It ultimately comes down to the funder’s approach to risk and how willing they are to look beyond equipment valuations and to the credibility of the proposal and the business behind it.

"Our approach to funding has always been more than just considering an asset’s value and taking a wider view of the business, the lending proposal business case and any additional security that might be offered. We think that this more granular approach to credit enables us to get to soft asset deals that some other lenders might choose to avoid."

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