Asset finance allowing new businesses to invest


Businesses across the UK are turning to asset finance to allow them to invest in much-needed equipment and vehicles, according to the latest figures from the Finance & Leasing Association, which show year-on-year growth of 11% in May1.

Car finance was up by 27% in May compared with May 2011. More businesses are investing in fleet vehicles than they were a year ago – whether replacing old fleet cars, or investing in new ones. Plant and machinery finance, and IT equipment finance also showed very strong growth.

There was also strong growth in the sales finance channel. 27% more finance was provided through commercial vehicle sellers, tractor suppliers, computer suite vendors, and other equipment suppliers than in May 2011. Sales finance accounted for 29% of all asset finance provided to businesses in May.

Geraldine Kilkelly, Head of Research and Chief Economist at the Finance & Leasing Association, commented:

“Asset finance is now very much on an upward curve. At current growth rates, the total asset finance market for deals worth up to £20 million will be back to pre-credit crunch levels by 2015.

“High acceptance rates in the asset finance market have meant that lenders are able to help a large number of businesses with their investment needs. New Government schemes have involved some asset finance lenders, helping them to lend even more. We are now asking that the new Funding for Lending scheme be opened to all lessors – including those who have not qualified for previous Government assistance schemes.”

Table 1: Total asset finance business, and extracts of breakdown by asset class

  May  2012 % change on May 2011 3 months to May 2012 % change on prev. year 12 months to May 2012 % change on prev. year
Plant and machinery finance (£m) 385 +26 1,168 +20 4,186 +17
Commercial vehicle finance (£m) 355 +7 1,195 +8 4,584 +17
IT equipment finance (£m) 88 +38 318 +35 1,242 +17
Business equipment finance (£m) 142 -16 456 -9 2,000 +3
Car finance (£m) 686 +27 1,982 +9 6,530 +8
Aircraft, ships and rolling stock finance (£m) 15 -92 55 -79 347 -62
Total excl. high value (£m) 1,790 +11 5,544 +9 20,534 +12
Total FLA asset finance (£m) 1,813 +1 5,638 +5 21,448 +1
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