The British Business Bank (BBB) has said asset finance needs further promotion in its scheme for lending to smaller businesses, and will work with the Finance & Leasing Association (FLA) to deliver it this year.

The Enterprise Finance Guarantee (EFG) scheme is a loan guarantee programme that targets smaller UK businesses that cannot otherwise get a bank loan because they lack sufficient collateral or sufficient years of operating track record.

A review of the EFG scheme conducted by the BBB found that it was largely on track in terms of provision for British businesses, but that an asset finance or leasing option ought to be developed.

The BBB review said: "To enhance the reach of EFG to encompass a form of alternative finance that growing numbers of smaller businesses are adopting, the BBB will develop a new asset finance variant in 2016.

"This is based on both internal research that suggests that a material, distinct and incremental market gap may exist within asset finance as well as consultation with the FLA and a number of asset finance providers. Notably, we found that lack of sufficient years of operating track record, lack of up-front cash deposit and lack of ‘hard’ assets with an established resale market (such as intellectual property, or customised equipment) may be creating market inefficiency in asset finance."

Simon Goldie, hnead of asset finance at the (FLA), said: "This is a very welcome development and reflects our discussions with the government and the BBB on this issue. We will continue to work with the BBB on the development of the asset finance option of the EFG, which the BBB says it intends to launch this Summer."