While lessors in parts of mainland Europe are benefitting from
an upsurge in government investment in SMEs, those in the UK remain
frustrated by government U-turns and what are perceived to be empty
promises.
In Italy, UniCredit Leasing will benefit from an agreement it
signed last month with Confapi to provide €5 billion of finance to
the trade body’s membership. In Germany, a €100 billion state fund
has been created to support family-owned SMEs.
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Meanwhile, in Britain the picture looks less rosy. The Small
Firm Loans Guarantee (SFLG), in which the UK government covers 75
percent of a lender’s exposure, has been suspended. Lessors such as
State Securities, a major player in the SFLG market, will lose out
as a result.
In its place has emerged the Enterprise Finance Guarantee aimed
at all companies requiring extra working capital. So far only seven
lenders, all banks, have been allowed to offer finance through this
scheme.
Simon Brook, a director at Capitas Finance Ltd, a specialist in
the UK asset finance broking and wholesale funding sectors, said
the new scheme and SFLG “look relatively similar”, but added: “The
replacement [scheme], however, needs to be implemented quickly as
existing SFLG offers have been withdrawn leaving companies
stretched at a time when liquidity is already tight.
“This was probably not what the government had intended when
they made their announcement but the devil is in the detail”.
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By GlobalDataAlso, a potential offer of a £20 billion loan scheme has been
dangled in front of small and medium-sized businesses by the
government.
Nonetheless, with SMEs being part of the reason for higher
levels of lessors’ arrears, combined with the fact that some small
companies are being squeezed by larger companies demanding better
supplier terms, it is unlikely asset financiers will see any growth
in lending to this market (which last year totaled around £15
billion).
Of course, this is not the only difficulty facing lessors. Asset
values everywhere are declining rapidly; in some cases they are 60
percent less than they were six months ago.
Values of construction equipment and commercial vehicles have
been badly hit, print equipment is “holding up”, according to
several well-placed sources, although the print labelling market
has bottomed out.
Those seeking alternative sources of business might do well to
switch their attentions to the turnaround finance business.
Increasingly lessors are receiving calls from companies whose
turnovers have been slashed and are desperate to be refinanced. The
size of these deals are growing, and also whereas in the past a lot
of this work came from brokers, increasingly insolvency
practitioners are calling lessors direct.
