SMEs Benefitting As UK Asset Finance Market Continues To Grow
Businesses are increasingly turning to the UK asset finance market to meet their goals the latest industry figures show. New data shows that more British firms are using their existing assets to help cash flow or increase working capital at competitive rates than ever before – a trend that is partly supported by the growing number of SMEs. This news not only signals that business confidence hasn’t been significantly impacted by recent Brexit-related economic turbulence, it also suggests that we are witnessing a sustained shift away from traditional high street lenders.
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Despite the impact of Brexit and other uncertainty in the British economy, the rise of the UK asset finance market clearly indicates that British businesses are remaining focused on their future opportunities. Entrepreneurs also haven’t been disheartened, as the UK is now home to a record number of SMEs, with in excess of 5.6 million small businesses operating across the country.
According to the latest figures released by the Finance & Leasing Association (FLA), the UK asset finance market grew for the seventh consecutive year in 2017. The rise in the number of businesses accessing asset finance and the value of the finance received demonstrates a willingness to invest in a range of business areas.
Across the whole of 2017, there was over £32 billion of new business underwritten through asset lending, representing a 5% increase when compared to the previous 12 months. Focusing solely on SMEs, which have traditionally found accessing finance from high street lenders a challenge, asset finance soared by 12%, reaching £18.6 billion.
Asset finance is a popular choice for businesses across a range of industries and sizes thanks to the flexibility and relative security that it offers. Due to the fact that security is provided in the form of existing assets, the rates offered in the UK asset finance market are typically far more competitive than other forms of finance. This allows organisations of all sizes to unlock greater levels of capital to meet their goals. This flexibility and favourable terms means that asset finance is quickly becoming the first choice for businesses in need of a short-term capital injection.
Plant and machinery finance was the biggest growth sector in 2017. Accounting for £6.6 billion of asset finance given over the 12 months, it saw a 12% growth rate and indicate a growing number of businesses investing in their operations with the long-term in mind. Other top figures for asset finance was the £9.5 billion underwritten for business car finance, the £7.5 billion given through commercial vehicle finance, and the impressive 7% increase in business equipment finance taking it to £2.6 billion.
While wider economic trends and projections have been gloomy, the rise of asset finance should be celebrated, suggesting that British businesses have no intention of slowing down their pace of growth or investment. Statistics published by HM Treasury show that GDP is expected to grow by 1.6% in 2018 and by 1.5% in 2019. However, during the last quarter of 2017, GDP grew by just 0.4% when compared to the previous quarter, and 2017 as a whole registered the slowest annual growth rate since 2012.