Asset finance is on the rise – make sure you don’t miss out
Lending to businesses to finance new business assets is at a five-year high as the UK economy continues to emerge from recession and growth becomes increasingly widespread.
That’s the buoyant message from the Finance and Leasing Association, the trade body representing the country’s many finance houses and lending organisations.
It is not difficult to identify the reasons behind the best first quarter of any year in the last five, in terms of lending to businesses. British businesses are feeling more confident about the broad economic outlook and their own market specifics and, as a consequence, are more confident in investing in their future growth.
That means that decisions to replace assets badly in need of replacement are now being taken, rather than being deferred until better times, because the perception is that the better times have, at last, arrived.
As a result, asset finance is on the rise. In the first quarter of the year, lending to fund new plant and machinery grew by 21%, while that for business equipment was up 20%. Commercial vehicle finance grew by a further 19%, while IT equipment finance was 11% higher than in the first quarter on 2013.
Across the board increases
The increases weren’t only in a few key business areas, either. The finance industry provided higher levels of finance to businesses across the board, including the agricultural, construction, manufacturing and services sectors, in the first quarter of this year.
All that activity meant that asset finance new business grew by 13% in Q1 2014 to almost £5.7 billion compared with the same period in 2013.
So, all the economic indicators are positive; all the lights fixed firmly at green. And business confidence is on the rise too, particularly amongst Small and Medium Enterprises.
SMEs are clearly leading Britain’s recovery and accounted for 62% or £3.5bn of all new business finance provided by direct lenders, brokers and sales finance channels in the first three months of this year.
Finance providers, too, are becoming more confident. More than 97% of respondents to a recent asset finance confidence survey said they expected the UK economy to improve further, while 94% said they expected business investment to continue to rise and 95% said they thought market conditions would continue to improve.
At the same time, more than 60% of respondents to the same survey said they expected the availability of funding for leasing and asset finance would increase this year to help further fund the recovery.
So what could this new-found business confidence mean for your business? Clearly the economic outlook is at its brightest for a number of years and many companies are looking to seize the moment and make important investment decisions.
Investment decisions typically start with your finance provider, and many companies are finding that banks are not necessarily their first port of call. This may be for a number of reasons, including tougher lending criteria, but many businesses are increasingly seeking independent means of finance.
What can independents offer?
Independent finance providers, like Maxxia, offer a credible alternative to the banks for many business finance needs and often have a long pedigree in the asset finance arena built up over many years’ experience.
That means that they are expert at providing the appropriate funding for a whole series of asset classes – be they new vehicles, plant and machinery, IT equipment, printing machinery, agricultural machinery, marine and aviation equipment – and many more.
Asset financing typical covers a variety of lending and payments solutions commonly tied to physical assets, so it’s important to discuss with your lender the solution that best suits your own needs.
This may be to optimise your cash flow, take advantage of short term windfalls or spreading your payments over the longest possible repayment period.
What is the best solution?
Typically, asset finance will involve leasing or lease-like structures, such as hire purchase, operating or finance leases, or sale-and-lease back arrangements. Again your lender should be able to draw on their experience and expertise to discuss with you the most suitable finance arrangement to meet your needs.
Your asset finance provider should also ideally provide a consultative approach which quickly identifies the key needs of your business. What does your business need? Where is your cash-flow tied up? What are your business aims?
Once these objectives have been clearly identified then your finance provider should work collaboratively with you to offer the type of asset finance that will help your business do what it needs to do.
Choosing the right finance provider should give you access to asset finance on 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 why now is the perfect time to invest in the future of your business and how our asset finance can work for you, please get in touch.