Demand for asset finance among small and medium-sized enterprises (SMEs) in the UK is expected to grow over the next year, according to a recent survey conducted by SME funding provider Asset Advantage.
In the survey, 72% of commercial finance brokers indicated that asset finance will be the main area of business funding demand for SMEs in the upcoming 12 months.
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Business acquisition and expansion loans are also expected to see higher interest, named by one in four brokers as areas likely to attract attention.
Other forms of commercial finance are expected to be less in focus. Invoice finance was cited by 22% of brokers, and property-related commercial lending by 17%.
This suggests that investment in equipment, expansion, and acquisitions is currently a primary concern for many SMEs.
The Finance and Leasing Association recently reported an 11% year-on-year increase in new asset finance business in September.
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By GlobalDataAlongside these trends, nearly 60% of brokers who participated in the Asset Advantage survey observed a rise in client requests for financing related to buying businesses or completing management buyouts (MBOs).
Asset Advantage sales director Gary Thompson said: “Commercial brokers are telling us that there is growing momentum among SMEs. Rather than seeking short-term fixes with inappropriate cash-flow loans, they are actively pursuing funding that helps them grow – and asset finance is top of their list in the coming year.
“Alongside this, SMEs are looking to grow through expansion and are therefore prioritising funding for business acquisitions. This certainly mirrors our current business levels and expectations for the year ahead.”
In response to these shifts, Asset Advantage has rolled out two new loan products recently, designed for UK SMEs.
The CapEx term loan supports investment in non-standard assets such as specialist equipment, soft assets, fit-outs, and refurbishments.
The business acquisition loan is intended for those looking to acquire another company, buy out a partner or complete a management buy-in.
