Leasing up by 12%
Leasing increased by 12% as expanding firms secured £29.1bn for assets last year – up from £26bn in 2014.
Figures from the Finance & Leasing Association show that the use of leases is at highest level for seven years.
Firms secured £29.1bn of leases last year for assets such as new vehicle fleets, IT systems and office equipment – up from £26bn the previous year and just below the £30.8bn secured in 2008, before the financial crisis took hold.
Peter Alderson, head of small business finance provider LDF (pictured above), said this was part of a trend for firms to turn to non-bank lending to grow.
He added: ‘The Bank of England’s recent credit conditions survey suggests that loans to fund merger and acquisition deals have crowded out lending to small and medium-sized enterprises. This may support the migration of SMEs to leasing firms rather than banks for finance.’
“UK businesses have seen their order books rapidly expand in recent years and are now targeting additional finance options to meet demand and continue this expansion further.
“Leasing has become increasingly popular amongst SMEs as a catalyst for growth, especially given the difficulties many still experience in sourcing finance through traditional means.
“The Bank of England’s recent Credit Conditions Survey suggests that lending to fund M&A deals has crowded out lending to SMEs, this may further support the positive migration of SMEs turning to leasing companies rather than banks for finance.”
Asset finance allows businesses to borrow the cost of a capital investment upfront, and spread the repayments across fixed monthly payments, helping businesses to clarify their budgets and contain costs.
Alderson added: “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.”