Invoice finance increased to £18.9bn at the end of Q3 2017, up from the £18.6bn recorded at the end of Q2 2017, according to figures released by UK Finance.

Equiniti found that quarters with relative declines in GDP caused a knock-on effect for invoice borrowing, despite there being positive growth in each quarter since 2014.

This was evident in Q1 2016 when GDP grew by just 0.16% and the balance of invoice finance fell by over 3%, while in Q4 2016, GDP grew 0.57%, coinciding with a rise in the invoice finance balance of 9%.

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Aaron Hughes, managing director at Equiniti Riskfactor, said: “Invoice finance continues to be the preferred method of business lending for SMEs in the United Kingdom, outstripping overdraft lending to SMEs.

“It is regarded as the optimal way to fund business growth because lending is directly linked to, and secured on, their customer’s sales ledger and so its continued growth over the past few years is unsurprising.

“Comparing the growth in invoice finance with that of the country’s value is a clear indicator that small to medium businesses will continue to strive for growth as long as GDP continues on an upward curve.

“It also raises the worry that should the UK suffer as a result of Brexit, or any other macroeconomic downturn, SMEs will batten down the hatches, stop borrowing and run into difficulty as a result.”