Total asset finance new business fell by 10% in November 2020 when compared with the same period in 2019, according to new figures released by the Finance & Leasing Association (FLA).
The commercial vehicle finance and business car finance sectors both registered a drop in new business in November 2020 of 1% and 5% respectively, when compared to 2019.
Meanwhile, plant and machinery finance reported a 14% fall and IT equipment finance 32% over the same period.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “In November, the asset finance market recorded its smallest rate of contraction in new business since the start of the pandemic. This was despite increased restrictions across the UK to deal with rising cases of Covid-19, including a second national lockdown in England.”
Research from the Federation of Small Businesses (FSB) revealed that a record number of small business owners are planning to close their firms over the coming 12 months, putting the UK on course to lose more than a quarter of a million businesses.
In a recent poll, the FSB surveyed 1,401 small firms for the Q4 2020 Small Business Index (SBI) at the end of December 2020. Of the firms surveyed, just under 5% say they expect to close this year.
Kilkelly continued: “UK-wide lockdowns during the first quarter of 2021 mean the near-term outlook remains challenging.
“The asset finance industry will continue to play a key role supporting business investment during 2021, as evidenced by almost £20bn of new finance provided to businesses since the onset of the pandemic. This support helped to fund more than 38% of UK investment in machinery, equipment and purchased software in Q3 2020.”
Gross lending to SMEs in the first three quarters of 2020 was more than double the annual total for 2019, reaching £54bn.
The value of lending in the second and third quarters was £36bn higher than during the same period of 2019 – driven by continued uptake of government-backed support.
Meanwhile, the consumer car finance market reported a fall in new business volumes of 24% in November 2020 compared with the same month in 2019. In the eleven months to November 2020, new business volumes in this market were 20% lower than in the same period in 2019.