Asset finance is the largest alternative lending option to conventional bank loans and overdrafts for SMEs. Earlier this month Lord Sassoon, Commercial Secretary to the Treasury, launched a new on-line directory of around 1,000 sources of asset finance and other alternatives to conventional ban loans. The free directory is intended to help 60,000 businesses to access alternative finance in its first year. .
Overall, asset finance new business in January 2012 grew by 14% compared with January 2011, to almost £1.5 billion. The value of new business contracts of up to £20 million increased by 23% over the same period.
The FLA figures show that in January, the sales finance channel reported the strongest rate of growth, with new business 36% higher in January than in the same month in the previous year, at £408m.
Broker-sourced asset finance grew by 30% over the same period to £282 million. The direct finance channel reported double-digit growth for the third consecutive month, with new business up by 16% to £778 million.
Finance for commercial vehicles grew by 23% in January, which means that this sector has grown year-on-year in each of the past eighteen months. Growth in plant and machinery finance was at its strongest in more than three and half years, with new business up by 40% compared with January 2011.
Geraldine Kilkelly, Chief Economist and Head of Research at the Finance & Leasing Association, commented:
"Our latest figures follow the trend of growth in asset finance that we have seen over the past twelve months. While cash flow is important for small businesses, the evidence is that many are using asset finance to invest in new equipment and to expand their businesses.
"Initiatives, such as the Small Business Finance Directory, present options for alternative finance. We hope that the taskforce's report will raise awareness of the funding sources that are available to small and medium-sized businesses."
