Asset finance grows at fastest rate since credit crunch

  • business confidence supports investment

Businesses return to pre-crisis finance spending levels

UK businesses are once again turning to asset finance at pre credit crunch levels to invest in a wide range of assets.

Latest figures from the Finance and Leasing Association show that asset finance spending soared by 22% to £2.7bn in June compared to the same month last year.

And in the first half of 2015, new asset finance business amounted to £14.3 billion, the best start to a year since the credit crisis.

Most asset finance sectors reported strong growth in June with new business car finance up by 33% to £774 million and spending on new IT equipment finance up by 32% to £248 million, compared to June last year.

Both sectors also recorded strong growth in the second quarter of the year (April – June), with new car finance up by 29% to £2.3 billion and the IT equipment finance sector up 43% to £526 million, compared with same period last year.

The commercial vehicle finance sector also reported business up by 18% to £594 million in June, while plant and machinery finance increased by 11% to £554 million.

For the April to June period, new commercial vehicle finance increased by 20% to £1.1 billion, while plant and machinery finance grew by 10% in compared with Q2 2014 to £1.5 billion.  Of that total, £409 million was for construction plant which was 12% higher than in quarter two in 2014.

Growth for most funding methods

When it comes to the types of finance methods that businesses prefer, most funding methods have seen overall growth so far this year.

For example, lease and hire purchase increased in quarter two by 19% to £4.0 billion compared with the second quarter of 2014, while operating leasing grew by 7% to £1.6 billion over the same period.

However, by contrast, finance leasing fell by 9% in the second quarter of this year to £777 million, but other finance methods by grew by 52% in quarter two to £1.0 billion.

Business confidence increasing

There are a number of reasons behind this boom in business investment. British businesses are feeling more confident about the broad economic outlook and their own markets and, as a consequence, are more confident in investing.

Figures from the Office for National Statistics showed that the UK economy grew by 0.7% in the second quarter of this year compared with the previous quarter.

The Government expects that GDP will grow by 2.6% this year and by 2.4% next year, while forecasts for fixed capital investment suggest steady growth of 4.7% this year and 4.5% in 2016.

At the same time, the number of company liquidations has fallen to a post-crisis low of 3,908, down 7.5% compared with the same quarter last year. In the 12 months to June 2015, the rate of liquidation was 0.48%, the lowest level since records began in 1984.

With the economic outlook is at its brightest since the credit crunch, many companies see this as the ideal time to make important investment decisions for their businesses.

Maxxia - straightforward asset finance

Investment decisions typically start with your finance provider, and many businesses are increasingly seeking independent, rather than bank-provided, means of finance.

This may be because the independent providers offer better rates of interest or less onerous terms than some of the traditional bank-based finance lines.

Maxxia is one of a number of independent finance providers who can provide solutions to many business finance needs, based around a long pedigree in the asset finance arena.

These can include finance solutions for a whole series of asset classes, such as new vehicles, plant and machinery, IT equipment, printing machinery, agricultural machinery, marine and aviation equipment.

It’s important to discuss the solution that best suits your own business needs before making that final investment decision. This may be to optimise your cash flow, take advantage of short term windfalls or spread your payments over the longest possible repayment period.

But independent experts will be more than willing to discuss your exact requirements in detail to find the solution that best suited to your particular needs.

What’s the best solution?

Your finance provider should be able to draw on their experience and expertise to discuss with you the most suitable finance arrangement from the funding methods available.

And they should also provide a consultative approach which quickly identifies the key needs of your business.

Once these objectives have been clearly identified, your finance provider should work with you to offer the type of asset finance that will help your business do what it needs to do.

Choosing the right provider should give you access to asset finance solutions suitable for a huge array of equipment across a wide array of sectors.

And having that degree of experience and flexibility working for you is truly an asset in its own right, and can help you make the right investment decisions for your business.

If you would like more details on how our approach to asset finance can work for you, please get in touch.

Maxxia - straightforward asset finance

By |August 17th, 2015|Categories: Asset Finance|Comments Off on Asset finance grows at fastest rate since credit crunch