UK back on top of European asset finance sector

5 July 2013

The UK’s total asset finance sector grew by 9.6% to €44.4bn in 2012, making it the biggest in Europe once again after losing this position back in 2007.

“Asset finance is a significant business segment for the UK and we predict that it is likely to experience further success in coming years,” commented Jim Muir, director of financial data management software group AutoRek. “The UK being back on top of the leasing industry is a positive sign and this is largely down to the presence of good providers, their good products and the new voluntary code.

“This combination has given clients extra confidence in the facilities on offer and is bound to ease some fears of over-dependence on this particular style of funding and increase its use. Leasing not only helps form closer communication bonds in business, especially when compared to longer term finance or blanket overdraft facilities, but it can also foster a new generation of intimate relationships being formed between banks, or other financiers, and clients.

“Ultimately, those businesses that have the most agility and information are bound to come out on top. Unobtrusive, low-cost electronic communications and seamless exchange of data between clients and banks will be critical to businesses’ success. The leasing industry is already moving in the right direction and has an important part to play in increasing economic momentum over the coming months and years.”

Separate ABFA Figures Also Show Rising Market
Separately, the UK’s Asset Based Finance Association (ABFA) showed that during quarter Q113, the number of smaller UK and Irish firms using asset based finance, which offers up to £500,000 to a firm, rose by 3%, or by 439 to more than 15,000 firms.

ABFA said these figures demonstrated the highest levels of this type of borrowing amongst small firms for almost three years. Overall, the number of companies using asset based finance rose by 9% in Q113 compared with Q112, to reach lending figures of £63bn. Total funding offered up by the industry to clients also increased, as members of ABFA received advances up from £15.3bn last year to £16.3bn in 2013.

ABFA added that the figure contrasted with the contraction seen across other methods of finance to small and medium-sized enterprises (SMEs), with bank lending showing a fall.

The stalled funding for lending scheme, project merlin and various other initiatives all appear to have failed to fund UK SMEs and drive business lending to repair the economy.

Kate Sharp, chief executive officer (CEO) of ABFA, said: “It is extremely heartening to see so many of the smallest businesses choosing to use asset based finance to fund their growth. Having recently surveyed accountants we know they say that access to funding is still a major issue for their clients. With some signs of confidence returning it becomes ever more important that firms can take advantage of the new opportunities that growth presents.

“This is where asset based finance already plays an important part, and our industry is ready and willing to do more to help fund the recovery.”

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