The British Business Bank (BBB) has commended asset finance as a solution for UK SME growth in its first annual report on the UK small business market.
The report looked at the growing number of small businesses in the UK planning growth and requiring funding options, with a shift in requirement from working capital to funding of fixed assets.
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It assessed bank debt, mezzanine debt, equity markets and alternative finance provision, including a chapter on asset finance.
The report reflected on the Finance & Leasing Association figures, which showed asset finance new business amongst its bank and non-bank membership fell by a third from peak (2007) to trough (2009), from £26bn to £17bn.
The BBB said the first nine months of 2014 had sustained growth for deals up to £20m, up 13% on the equivalent period in 2013, and that growth in asset finance during the recovery contrasted with traditional lending, where the recovery had been tentative.
Keith Morgan, chief executive of the BBB wrote; "The detailed analysis contained in the report will be used to inform the development of the British Business Bank’s business plan for the coming year, helping us to identify how to best deploy our resources."
The report summarises three main findings;
– More businesses will seek finance for growth in 2015
– A more diverse and vibrant supply of finance is needed
– Awareness and understanding of the range of finance options is not yet comprehensive enough
Stephen Sklaroff, director general of the Finance & Leasing Association (FLA), said: "We welcome the British Business Bank’s recognition that asset finance (leasing and hire purchase) is a market solution to the problem of small business lending, that it has a very high application success rate for the many SMEs which already use it, and is an important part of the UK’s investment recovery story.
"The BBB also recognises that asset finance will play an important role in the small business finance markets in future, and we look forward to continuing to work with them to ensure that even more SMEs are made aware of the advantages of asset finance."
