SMEs choosing challenger and specialist lenders to support investment

Commenting on the British Business Bank’s Small Business Finance Markets Report for 2022/23, Simon Goldie, Director of Business Finance at the Finance & Leasing Association (FLA) said:

“The fact that SMEs are increasingly choosing to borrow from challenger and specialist lenders underlines the importance of having a broad spectrum of providers to ensure that much needed finance reaches all corners of the economy.

“The report also revealed that the asset finance market saw record levels of new business in 2022. Leasing and hire purchase are popular products with SMEs – they make good business sense. 

“In the current economic conditions, firms may want to maintain some flexibility with their cash flow. Depending which sector they operate in, they may not want to buy an asset outright if they operate in a high tech industry where obsolescence is a factor or if they only need it for a few months at a time.

“Because of the inherent flexibility of asset finance, it is all the more frustrating that the Super-Deduction does not include these options.

“The FLA and seven other trade bodies have written to the Chancellor recommending that a new Green Super-Deduction replaces the existing programme when it comes to an end in March. 

“This would help to address an additional finding in the British Business Bank’s report – that Net Zero deals are concentrated in London. Net Zero is a national issue, and firms across the country need finance options that work with the grain of their business.”

Note to editors: 

1. The FLA and BVRLA Green super-deduction paper can be found here
2. The British Business Bank’s report
3. In 2022, members of the Finance & Leasing Association provided £148 billion of new finance to UK businesses, households and the public sector.  
4. Of this total, £55 billion was provided by non-bank lenders. £34 billion was provided in the form of asset finance to businesses - £22 billion of which went to SMEs to fund new equipment, plant and machinery, or purchased software. £115 billion was provided in the form of consumer credit, which includes £50 billion of motor finance supporting the purchase of 84% of all private new car registrations.
5. For media enquiries, please contact the FLA press office on 020 7420 9656.