The number of our country’s companies leasing equipment rather than borrowing from banks has increased by 12 per cent since 2014 hitting a seven year high. New figures by Businesscomparison.com’s partner LDF show a dramatic turn towards asset finance by firms to raise capital for items such as office equipment, vehicle fleets and IT systems.
The leap in businesses seeking non-bank financial support is up from £26billion in 2014 and falls just below the 2008 figure of £30.8 billion which was before the financial crisis according to the report.
Asset finance helps businesses to organise their budgets and keep a tight rein on costs by enabling them to purchase items up front and spread the repayments out.
Commenting on the research, managing director, Peter Alderson, said:
“Leasing has become increasingly popular amongst small and medium-sized enterprises as a catalyst for growth, especially given the difficulties many still experience in sourcing finance through traditional means.
“As the amount of borrowing through asset finance approaches pre-2008 levels, many UK businesses are optimistic and looking to make the investments that may have been put on hold over the last few years.”
The asset finance industry funded almost 32 per cent of all UK investment in machinery, equipment and purchased software in 2015.
Head of Businesscomparison.com, Phil Brennan comments:
“Asset finance is clearly an option that is appealing to small and medium sized business owners who are tired of going to the banks with a begging bowl and need a fast and effective means through which to grow. Many of the lenders can actually help the customer in negotiating the best price for the required product.
“Purchasing equipment is essential to many enterprises and failure to raise the funds to replace or purchase new equipment can really hold them back. These figures by LDF show that the tide is slowly turning away from the traditional bank loans when it comes to certain types of funding. Business owners are becoming more confident about finding the best finance solutions for their specific business needs.”