The Finance and Leasing Association (FLA) has just released figures that show a growth of 27% in asset finance new business in March this year. During that month, IT equipment finance increased in value by 35%, and plant and machinery finance and commercial vehicle finance by 27% and 21% respectively, in comparison with the figures from March 2014.
Results from the first quarter show IT equipment finance up by 53% compared with Q1 2014, while plant and machinery finance and commercial vehicle finance each grew by 13% in Q1 2015.
The total value of new business in March, at £3.1 billion, is reported to be the biggest monthly total since September 2008 overall.
These are figures the NACFB has followed with interest, as our own annual survey is due to go out to our members in the next few weeks. When we last got survey results in, they covered the period ending June 2014 and showed a 17.8% increase in the leasing sector.
It seems probable that we’ll see that trend continuing, but we have a considerably larger pool of respondents than the FLA, at over 1300 members. The larger sample size and longer sample period will help show up whether March is a statistical blip or – as we hope – representative of sustained growth.
Of the deals that NACFB brokers are currently completing sourced from the findSMEfinance.co.uk website, slightly more than one quarter are leasing deals, at an average deal size of a little under £40,000. Look down the list of what small businesses need, and you see wood-burning kilns, meat refrigeration display units, laser engravers, items from the cheaper end of the range of values our members will do deals for.
The day-to-day data from our brokers – an expression of aspiration for future deals, rather than a snapshot of past business – echoes the FLA findings.
Right now we can see a huge appetite among our members for deals involving construction, plant, and office equipment – three of the diagnostic signs of a healthy economy. It’s in farms and agriculture, and the lower-end of the hospitality sector (ie fast food outlets), where things look relatively depressed – and maybe that is to be expected in times of strong growth. In crude and general terms, if your pay packet increases, you don’t celebrate by eating more so much as by eating out.
All of this points to why Britain is being held up as an example of how to do commercial business. In the UK there’s a choice of alternative funders which they simply haven’t got in continental Europe. From a European’s perspective, our lending environment is a lavish banquet compared to the two-courses-with-wine that they are used to closer to home.
I was privileged to attend a private lunch with the European Investment Bank at the Egmont Palace in Brussels on May 7th. The event was the European Business Summit and the NACFB has been closely involved in the manifesto document. We will be going back later this summer to give them more of an insight into how UK companies are funded, and I suspect our survey results, when they come in from brokers throughout the UK, will show we’re doing a lot of things right.