Historically high
interest rates on overdraft facilities have contributed to an 8%
rise in asset finance over the last year, according to
Syscap.
The UK finance provider
said figures from the Finance and Leasing Association (FLA) for the
twelve months to the end of September, which will be released at
the end of November, show £20.9bn in asset finance was lent to
businesses in the UK, up by 8% on the previous year.
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The average interest
rates being paid by businesses on their overdrafts was 3.46% in
September 2011, the highest rate since February 2009, according to
data from the Bank of England.
Philip White, chief
executive of Syscap, said: “The Eurozone crisis has sent average
business overdraft rates shooting up to their highest level in
nearly three years, despite stability in the central bank
rate.”
White said the rates
were especially difficult for small businesses which, he added,
often have higher-than-average rates and can be hit with additional
costs through arrangement and annual fees, as well as on-going
management fees and potential penalty charges.
White suggested banks
were still failing to make other types of loan more widely
available, making overdrafts the only form of business borrowing
available from high street lenders which in turn has led to a
greater uptake of asset finance.
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By GlobalData“It’s hardly surprising
that small businesses are looking to leasing and other forms of
asset finance for more sustainable alternatives to funding
investment than through an overdraft or bank loan,” he
added.
Separate research by
Syscap conducted this autumn revealed that small businesses were
unhappy with the availability and cost of other types of lending
offered by banks.
Syscap found 75% of
small businesses surveyed felt that the bank lending margins on
loans were too high, up from 73% the same time last
year.
A third said that their
ability to access bank loans had got worse over the last year, with
12% of businesses saying that their access to bank loans has
worsened further since the spring.
grant.collinson@vrlfinancialnews.com
