Asset Finance Market
- Funds just over a quarter of all business capital investment, other than property.
- Comprises bank subsidiaries that provide around 75% of asset finance, and non-banks (including manufacturer subsidiaries) who provide the remaining 25%.
- Provides finance to around 20% of all SMEs, and around 33% of those SMEs who seek external funding.
The advantages of asset finance (leasing and hire purchase) are:
- Investment in real business assets, including plant and machinery, office technology, and commercial vehicles.
- Longer-term than many bank loans, typically 3 to 5 years.
- Generally non-cancellable by the lender, providing certainty to businesses.
- Valuable to businesses that have limited capital, or those that need to manage their cashflow.
- Accessible, as it is secured - largely or entirely - on the asset being financed.
- Flexible, as leasing allows businesses to change their business equipment at the end of the rental period.
- Economical, as the provider can often buy assets lower, and sell higher, than an individual business.