Carl D’Ammassa, is group managing director, business finance at Aldermore
Over the past few months I have been getting out and about visiting our regional offices. During my time on the road, one message I have heard loud and clear from SMEs right across the UK is that for much of the past seven years business owners have become used to operating in uncertain times and so have often funded their activities from their cash surpluses instead of applying for external finance.
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It seems that times are changing though and business owners are feeling more confident and giving more consideration to alternative means of investing in their businesses. The latest figures from the Finance & Leasing Association show that the UK’s asset finance market has now recorded two years of consecutive monthly growth, meaning that the market has expanded in every month during that period. The growing demand for our products and services that we have seen over the past two years certainly backs up the FLA’s figures.
A lot of these firms have seen the growth in the wider economy and gained the confidence to take the plunge and make the most of the low interest rate environment leading into 2016. Software investment for example has a seen a huge surge in demand, with the provision of IT equipment finance having grown by 48% year-on-year. Given the ever increasing need for IT security I see no sign of that demand abating.
What’s more, last month’s Autumn Statement provided some welcomed news for businesses as the doubling of small business rate relief was extended for another year. This is a great boost for SMEs and the introducer community that serves them.
As SMEs take tentative steps towards financing growth it’s important that our industry is in a suitable position to advise and guide them. Now, more than ever, we have to make sure that lenders and introducers are working together to deliver the best possible product to the end customer. Pushing business owners into the wrong product is not only detrimental to their business but can also harm the reputation of our industry. Customers need to see that investment can lead to tangible improvements in business productivity to encourage them to further invest and grow.
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By GlobalDataI have also been struck by the number of businesses that are turning to asset and invoice finance for the first time. Businesses of all sizes and from a range of sectors are now considering these products with recruitment businesses, for example, seeking our support to enable them to close payment gaps.
At Aldermore we have already started thinking about how we can develop our offering to non-traditional markets and I urge introducers to do the same. Trust in financial services is starting to return and there is a growing appetite for our support so we have a window of opportunity to make the most of this before the long-mooted rise in interest rates poses the next challenge for small businesses.
