Businesses turn to asset financing in tough times, market analysis finds
New lending via asset financing has increased by 9.7% annually to £34 billion, market analysis by specialist broker Sirius Property Finance has shown.
The research revealed that asset finance as an option to drive business growth continued to increase in popularity last year, with the services sector – accounting for 65% of total new lending last year – being the primary driving force behind the uptick.
The construction sector was the second largest driver of asset finance new lending with 10%, while the agricultural and manufacturing sectors also accounted for a sizable amount of activity with 8% of total lending apiece.
Sirius’ analysis of FLA asset finance data also showed that commercial vehicles were the most common asset acquired by UK businesses last year, accounting for 29% of new lending, followed by company cars (27%), and plant and machinery equipment (23%).
According to Sirius Property Finance, asset finance is a popular choice for many businesses as it is often cheaper than other forms of financing, although it can come with restrictions such as limits on the use of the equipment, mileage for example, while most financing is also often short-term.
In July, Sirius formally launched its asset finance offering to complement its existing property debt advice service for small and medium enterprises and high net worth clients.
“Asset financing is a great way to support company growth without the need of an outright cash lump payment,” commented Nicholas Christofi (pictured), managing director at Sirius Property Finance.
“Whether it’s the lease of equipment, a finance lease, an operating lease or contract hire, there are numerous ways asset financing can help a business to expand, and it’s a more versatile and often more cost-effective route when compared to other financing options.
“In the current economic climate, it’s also growing in popularity, allowing many businesses to plan for the future at a time when they may not have the disposable income to do so. This means that when the economic picture does start to brighten, they are poised to hit the ground running, rather than playing catch up with their competitors.”
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