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UK asset finance new business holds steady

The UK asset finance market has maintained a full-year growth rate of 4% as latest figures show the market held steady during November 2017.

New figures released today by the Finance & Leasing Association (FLA) show that asset finance new business (primarily leasing and hire purchase) in November was £2.5 billion, a similar level to the same month in 2016.

The commercial vehicle finance and IT equipment finance sectors reported new business up by 5% and 1% respectively, compared with the same month in 2016, while new finance for plant and machinery fell by 3% over the same period.

Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said: “The asset finance market reported a broadly stable picture across the main asset sectors in November, and remains on course to report a record level of annual new business in 2017 of around £32 billion.”

Total FLA asset finance growth to the end of November is 4%, but excluding high value items, it is 6%.

Nov 17 % change on

prev yr

 3 mths to

Nov 17

 % change on

prev yr

 12 mths to

Nov 17

 % change on

prev yr
Total FLA asset finance (£m)  2,541  0 7,962  0  31,804  +4
Total excluding high value (£m)  +4  7,936  +3  30,919 +6
Data Extracts:
By asset:
Plant and machinery finance (£m)  481  -3  1,464  -2  6,506  +10
Commercial vehicle finance (£m)  691  +5  2,061  +4  7,574  +2
IT equipment finance (£m)  235  +1  642  +5  2,246  -4
Business equipment finance (£m)  209  -4  624  +4  2,566  +9
Car finance (£m)  738  -2  2,538  -1  9,854 +5
Aircraft, ships and rolling stock finance (£m)  8  -60  45  -45  574  +18
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Call for government support as asset finance grows

The UK government has been urged to support the growth of the invoice finance and asset-based lending sector in 2018 after newly-released figures revealed that demand reached record levels last year.

Data released by UK Finance shows that total sales (turnover) of clients supported by invoice finance and asset-based lending are up 4% for UK clients, standing at £214 billion for the first three quarters of 2017.

Total advances (the amount of funding being provided to clients at the close of the most recent quarter) were up 13% year-on-year to a record level of more than £22 billion for UK businesses.

Client numbers remained stable at just over 40,000 UK clients.

The data revealed that the exporting picture is particularly strong, with sales from clients through export invoice discounting facilities up 33% year-to-date for Q3 2017 and export factoring up 11% over the same period.

Matthew Davies, director, invoice finance and asset-based lending at UK Finance, said: “There is increasing understanding amongst businesses of all sizes of how invoice finance and asset-based lending can support them as they grow, and it is particularly encouraging that a substantial proportion of the sustained increases in lending we’ve seen in recent months is helping boost UK exports.

“More funding could and should be provided through invoice finance. To unlock this, the government should bring forward long-awaited legislation to give more smaller firms, in particular, access to much-needed capital.”

So-called ‘ban on assignment’ clauses are sometimes imposed by larger businesses on their smaller suppliers and can restrict the finance options available to those supplier businesses.

To address this, the UK Government is expected to bring forward revised Business Contract Terms (Assignment of Receivables) Regulations.

UK Finance represents the finance and banking industry operating in the UK, with around 300 members providing credit, banking, markets and payment-related services.

The new organisation brings together activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.

Source: Asset Finance International

how does it work asset finance UK asset finance market
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39% of brokers expect asset finance demand to increase in 2018

Almost two-fifths of brokers (39%) believe that demand for asset finance funding will continue to increase in 2018, according to the latest United Trust Bank survey.

A quarter (25%) expected asset finance demand from SMEs to stabilise, while 8% believed lending activity would decline.

Some 28% of brokers were unsure of what 2018 had in store and selected the “don’t know” option.

When asked which industry sectors were likely to drive demand for asset finance in 2018, brokers chose the construction industry as the most likely sector, followed by transport and waste management.

Martin Nixon, head of asset finance at United Trust Bank (pictured above), said: “There’s no doubt that awareness of asset finance is growing among UK SMEs.

“Lenders, brokers and industry bodies – such as the FLA and the NACFB – are working hard to spread the word about the versatility and flexibility of asset finance and how quickly and easily transactions can be completed.

“Dealing with a professional asset finance specialist is a far cry from what’s involved in trying to raise a business loan from a high street bank or applying to increase your company overdraft.

“Brokers have known this for years, but the message is now getting through to business owners across the country, and this is good news for everyone.

“The government’s push to tackle the housing shortage should mean that construction and housebuilding companies are kept busy for the foreseeable future.

“As a result, we also expect significant activity in the funding and refinancing of new and used construction plant and machinery.”

Source: Bridging and Commercial