Bank lending to leasing companies has jumped 17% since May 2011, according to figures obtained by UK leasing broker Syscap from the Bank of England, despite bank lending in general falling 5% over the same period.
Philip White, chief executive of Syscap credited this rise with banks being more willing to lend to leasing companies in increasing amounts thanks to improved credit checking processes the industry.
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Outstanding bank loans to leasing companies stood at £27.2bn in August, up from the 20 year low of £23.2bn in May last year, although this figure is still short of the £35.2bn figure from September 2008, before the financial crisis.
White said leasing has become a funding source of choice for many solid small businesses and added it one is of the few areas of the finance industry that is increasing funding to businesses.
"It’s great to see that banks are responding to this demand by providing more finance to businesses through the leasing sector," he said.
As well as the industry investment in the credit checking process, White added: "Leasing companies are also getting better at assessing the value of collateral, taking greater care in the valuation process which leads to higher recoveries if the borrower gets into trouble."
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