The FLA has welcomed a move
to point businesses toward alternative forms of finance by the
Business Finance Taskforce, made up of six UK banks.

The push on asset finance and
other alternative financing was one of 17 recommendations made by
the group, made up of Barclays, HSBC, Lloyds TSB, Royal Bank of
Scotland, Santander and Standard Charter.

Julian Rose, head of asset
finance at the FLA, said: “Of the 17 actions, the one with greatest
relevance to asset finance is that the banks will do more to
signpost alternative sources of finance. We are already seeing some
excellent new material on banks’ websites highlighting the value of
asset finance.”

This includes HSBC, whose
website sets out a “comprehensive range of funding solutions” and
highlights the importance of asset finance in maintaining
businesses’ cash flow.

Rose said: “From a study of
small businesses we commissioned, we know many have continued to
invest in new equipment using asset finance obtained through

FLA figures have shown that
asset finance is typically used to fund at least 25% of the UK’s
fixed capital investment.

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The measures set out by the
task force also included a proposed £1.5bn (€1.7bn) business growth
fund to be distributed among SMEs with turnover between £10m and

It will take equity stakes in
businesses as this will make it easier for them to borrow larger
sums of money. The smallest stake in a company would be 10%, held
for five years.

Each of the six banks will contribute between £300m and
£350m. The £1.5bn figure refers to the ambition for the fund, to be
achieved at an as-yet unspecified time.