finance lending
cfnuk No Comments

Asset finance lending sees 9.7% annual increase

New lending via asset financing has increased by 9.7% annually, totalling £31bn, with the service and construction industries driving this growth to the greatest extent.

Sirius Property Finance analysed total asset finance lending, the industry sectors utilising it to the greatest extent, as well as the most common assets financed.

Asset finance allows businesses to grow by removing the high upfront cost of acquiring much needed operational equipment, instead allowing them to pay an agreed amount over a period of time.

There is no need for the company to provide additional collateral as the asset itself is the collateral, with the asset finance provider also often responsible for the maintenance of the asset and its replacement if faulty, as well as any depreciation in its value.

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.

The analysis by Sirius Property Finance shows that last year, commercial vehicles were the most common asset acquired by UK businesses, accounting for 29% of new lending, followed by company cars (27%) and plant and machinery equipment (23%).

Asset finance as an option to drive business growth is increasing in popularity. The latest figures show that in 2022, there was £34bn in new lending, a 9.7% increase on the previous year.

Discover our Asset Finance Broker services.

The services sector was the driving force behind this uptick, accounting for 65% of total new lending last year, with the construction sector accounting for the second largest proportion at 10%. The agricultural and manufacturing sectors also accounted for a sizable amount of activity, accounting for 8% of total lending a piece.

Managing director of Sirius Property Finance, Nicholas Christofi, commented: “Asset financing is a great way to support company growth without the need of an outright cash lump payment. 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.”

By Rozi Jones

Source: Financial Reporter

finance lending
cfnuk No Comments

Asset finance new business grew by 14% in July 2023

New figures released today by the Finance & Leasing Association (FLA) show that total asset finance new business (primarily leasing and hire purchase) grew in July 2023 by 14% compared with the same month in 2022. In the seven months to July 2023, new business was also 14% higher than in the same period in 2022.

The business new car finance sector reported new business up in July by 59% compared with the same month in 2022. The business equipment finance and commercial vehicle finance sectors reported new business growth of 15% and 12% respectively, over the same period.

Discover our Asset Finance Broker services.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said: “The asset finance market has reported double-digit new business growth in eleven of the last twelve months. Growth in July was more broad-based with higher levels of new business in the equipment finance as well as the vehicle finance sectors.

“In the twelve months to July 2023, asset finance new business provided to SMEs reached a record level of £24.4 billion. There has been increased use of leasing and hire purchase by larger SMEs with 10 or more employees. The success rate of SMEs who applied for asset finance since the beginning of 2022 was high, with 93% of those businesses offered and taking what they applied for.”

By Lisa Laverick

Source: Asset Finance International

asset-based lending
cfnuk No Comments

Discover how asset-based lending could transform your business

These are challenging times for businesses in Scotland. The effects of high inflation, supply chain disruption, and increasing energy prices are all leading SMEs to turn to more flexible forms of finance.

Lenders can play their part and offer tailored solutions to support SMEs trying to thrive in difficult conditions. In response to this, Shawbrook has enhanced its asset-based lending offering*, simplifying the onboarding process to give businesses another option during complex times.

What is asset-based lending?

Asset-based lending (ABL) is a form of business financing that enables a business to secure a loan by offering its assets as collateral. Assets often include inventory, machinery and equipment, as well as real estate or debt owed to the business. By leveraging the value of these assets, businesses can access capital to manage cash flow, fund expansion, or seize growth opportunities.

Historically, securing an ABL facility was complex and time-consuming, with businesses needing documentation for each asset class they leverage. This made ABL a complicated financing solution, typically used as a last resort or where businesses have poor credit histories.

ABL for the modern-day

At Shawbrook, we feel that ABL can be versatile and enable businesses to unlock substantial value tied up in both paper and physical assets, providing the financial headroom to support pivotal events such as acquisitions, management buy-outs, and other grown plans.

Recognising this, we streamlined our ABL offering so businesses could leverage multiple asset classes within one straightforward piece of documentation. We removed the cap on the collateral mix that businesses employ for funding leverage, with every deal judged on a case-by-case basis. These changes greatly improve the speed of the onboarding process and make the facility significantly easier to manage over its lifetime.

This enhanced ABL proposition can also be integrated with other financing facilities to deliver a bespoke hybrid lending experience. This enables clients to gain access to a highly versatile product and adapt to changing circumstances in real time.

Discover our Asset Finance Broker services.

How an ABL loan transformed Genius Food Limited’s facilities

Utilising Shawbrook’s enhanced ABL solution, an Edinburgh-based food manufacturer quickly secured funds against its business assets to support further growth.

A specialist in manufacturing gluten-free goods which are distributed worldwide, Genius Foods approached Shawbrook to refinance an existing invoice finance line and raise funds to improve production lines at its Bathgate facility. Previously, securing funding on these terms would be painfully time-consuming and complex, resulting in heaps of paperwork.

Using the firm’s invoices as collateral, Shawbrook rapidly assembled a £7.5m asset-based lending package for Genius, incorporating a financing line, a property loan and a cashflow loan, on a 25-year amortised repayment profile.

The terms agreed demonstrate the flexibility and value of ABL in preserving cashflow whilst meeting a multitude of different needs for a client.

The package enabled Genius to leverage its assets to generate the cash needed to continue providing high-quality goods to market and refinance its original invoice finance line, all within one facility that delivers efficiency and is easy to manage.

By Leena Sidat

Source: Insider

asset finance
cfnuk No Comments

Asset finance new business grew by 13% in May 2023

New figures released by the Finance & Leasing Association (FLA) show that total asset finance new business (primarily leasing and hire purchase) grew in May 2023 by 13% compared with the same month in 2022. In the five months to May 2023, new business was also 13% higher than in the same period in 2022.

The business new car finance and commercial vehicle finance sectors reported new business up in May by 60% and 7% respectively, compared with the same month in 2022. The plant and machinery finance sector reported a fall in new business of 10% over the same period.

Discover our Asset Finance Broker services.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said: “The asset finance market reported a thirteenth consecutive month of growth in May as the trends of higher average advances across asset finance sectors and strong performances by the vehicle finance sectors continued. Lending to larger businesses was up by a third in May, and to SMEs grew by 4% in line with the previous month.

“The industry is also cautiously optimistic about prospects for future growth, with the FLA’s Q2 2023 Industry Outlook Survey showing that almost three-quarters of asset finance respondents anticipate some increase in new business over the next year.”

By Lisa Laverick

Source: Asset Finance International

car finance
cfnuk No Comments

Consumer car finance new business volumes fell by 10% in May 2023

New figures released by the Finance & Leasing Association (FLA) show that consumer car finance new business volumes fell in May 2023 by 10% compared with the same month in 2022. The corresponding value of new business also fell by 10% over the same period.

In the five months to May 2023, new business fell 9% by value and 8% by volume compared with the same period in 2022.

The consumer new car finance market reported a fall in new business in May of 8% by value and 9% by volume compared with the same month in 2022. In the five months to May 2023, new business volumes in this market were 9% lower than in the same period in 2022.

Discover our Asset Finance Broker services.

The consumer used car finance market reported a fall in new business in May of 11% by value and 10% by volume compared with the same month in 2022. In the five months to May 2023, new business volumes in this market were 7% lower than in the same period in 2022.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said: “May saw the continuation of recent trends with a strong performance in the business new car finance market offset by lower levels of new business in both the consumer new and used car finance markets.

“The industry remains cautiously optimistic about the prospects for future growth, with three-quarters of motor finance respondents to the FLA’s Q2 2023 Industry Outlook Survey anticipating some increase in new business over the next year.”

By Lisa Laverick

Source: Asset Finance International

asset finance
cfnuk No Comments

SMEs extend machinery asset life as supply chain issues hit

SMEs have been forced to extend the life of their existing assets as global supply chain issues reduce the availability of new assets, Paragon Bank research has found.

Paragon’s survey of over 500 businesses, conducted on behalf of the bank by Opinium, found that nearly a third of SMEs (30%) had operated existing machinery longer than planned in the past 12 months, with 29% acquiring pre-owned machinery due to the unavailability of new assets.

A fifth of companies reported that they had refinanced an existing machinery asset.

A similar story was reported with commercial vehicles, with 34% of SMEs running these for longer than planned and 20% acquiring pre-owned equipment.

The problem with the supply of new assets forms part of a wider issue SMEs face with the broader supply chain, with companies reporting a deterioration across several areas of supply.

The main issues businesses faced were in the cost and availability of goods – 43% of SMEs said the cost of goods and services had worsened in the previous three months, versus 23% that said it had improved. Meanwhile, a third (32%) of companies reported the availability of goods and services had worsened, against 26% that recorded an improvement.

SMEs also recorded a deterioration in the reliability of suppliers (32% worsened/24% improved) and the financial stability of suppliers (26% worsened/23% improved).

Discover our Asset Finance Broker services.

Improvements were seen in the areas of ESG practices, with 26% of firms reporting that supplier performance had improved against 14% that recorded a downturn, and suppliers hitting service level agreements (23% improved/20% worsened).

John Phillipou (pictured), Paragon Bank SME Lending Managing Director, said: “Supply chains were significantly disrupted by the Covid pandemic and are only just getting back on their feet today. Up until recently, it was near impossible for SMEs to secure the new assets they required, so they have been forced to use existing assets for longer and to refinance them to support cashflow. We have certainly seen a strong increase in lending against refinanced assets.”

He added: “More broadly, companies have experienced disruption in their supply chains, particularly in areas such as the availability and cost of goods. We would expect to see these pressures ease as inflation comes down and global supply chains return to more normal conditions.”

By Lisa Laverick

Source: Asset Finance International

asset finance
cfnuk No Comments

Asset finance new business grew by 12% in April 2023

New figures released by the Finance & Leasing Association (FLA) show that total asset finance new business (primarily leasing and hire purchase) grew in April 2023 by 12% compared with the same month in 2022. In the first four months of 2023, new business was 13% higher than in the same period in 2022.

The business new car finance and business equipment finance sectors reported new business up in April by 48% and 13% respectively, compared with the same month in 2022. The commercial vehicle finance and plant and machinery finance sectors reported falls in new business of 2% and 6% respectively, over the same period.

Discover our Asset Finance Broker services.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said: “The asset finance market reported a year of sustained monthly new business growth in April supported by continued strong growth in the business new car finance sector. Annual new business in April at £35.3 billion was only 1% lower than the pre-pandemic peak in 2019.

“Asset finance supports business investment across all major industry sectors and business size. New business provided to larger businesses grew by 27% in April, to the manufacturing sector increased by 30%, and to the services sector grew by 11%, compared with April 2022.”

By Lisa Laverick

Source: Asset Finance International

Freshfields
cfnuk No Comments

Freshfields strengthens leveraged finance offering with London high yield partner

Global law firm Freshfields Bruckhaus Deringer (‘Freshfields’) has today announced that Haden Henderson, an experienced high yield bond lawyer, will join the firm’s Global Transactions practice as a partner in London, an appointment which will strengthen the firm’s high yield and leveraged finance offering.

Henderson joins from Baker McKenzie, where he has been a partner since 2018. He has extensive experience advising private equity funds, corporations, investment banks and credit funds on high yield bond offerings, committed leveraged finance transactions and bond restructurings. His move to Freshfields will further enhance the firm’s global high yield and leveraged finance offering to its clients and also enhance the firm’s wider European private capital practice.

Discover our Asset Finance Broker services.

Freshfields’ London transactions head, Andrew Hutchings, said: “I am delighted to announce the appointment of Haden Henderson to our Global Transactions practice. This will enhance further our market-leading European private capital group and enable us to continue to deliver excellent service for our clients across all debt products.”

Global co-head of leveraged finance Alex Mitchell added: “We’re very pleased to welcome Haden to our growing team. His high yield experience strengthens our offering with bespoke legal advice at the forefront of the debt markets, helping our clients address their financing needs and reach their goals.”

The appointment of Henderson to Freshfields’ London office follows that of partners Carol Van der Vorst, Rebecca Ward and Lisa Stevens, who joined the firm’s leveraged finance, financial sponsors, and restructuring capital solutions teams respectively in 2022.

Source: Freshfields.com

car finance
cfnuk No Comments

The surging popularity of invoice finance

With cash being crucial to business survival and growth, SMEs need to access cash through alternative funding solutions to continue to enable them to adapt, innovate and grow.

Invoice finance is one of the most effective ways for businesses to improve cash flow and sustain growth in today’s uncertain climate.

As SMEs face up to a deepening late payments crisis, invoice finance – borrowing against the value of unpaid invoices – has surged in popularity to provide crucial support in tough economic times.

By releasing up to 90% of the value of unpaid invoices, businesses can access additional working capital and use the funds to support day-to-day cashflow requirements or fuel future investment plans focusing on corporate social responsibility.

Invoice finance is not a new funding solution; it has been around for decades and has supported many thousands of businesses over the years, as it still does. By unlocking cash that could otherwise be trapped in unpaid invoices, invoice finance is a financial solution that can support the entire credit management process, protect against the risk of non-payment, and deliver funding when many other funding types are unable to.

In the UK, invoice finance has become an increasingly popular alternative to traditional financing options like bank loans and overdrafts, as it offers a more flexible and accessible solution for businesses in need of cash flow support and caters to a wide range of industries, including manufacturing, wholesale, construction, recruitment, and professional services.

Recent data from alternative finance provider Time Finance has shown the growing popularity of invoice finance amongst the B2B community, with demand predicted to rise throughout 2023 as SMEs set out to stabilise their finances.

Discover our Asset Finance Broker services.

The new insight shows that invoice finance is ranked highest amongst alternative finance solutions, with 32% of financial intermediaries stating that invoice finance will be the most popular service to support cashflow this year.

Phil Chesham (pictured), Managing Director of Invoice Finance at Time Finance, commented: “We are seeing a real uplift in businesses that come to us for invoice finance, and this is definitely a trend we expect to see continue throughout 2023. At face value, this is an indicator of the cashflow challenges that businesses are experiencing, but looking at this more positively, we can take this as a sign that more businesses are discovering the real value of invoice finance.

“Invoice Finance is a helpful tool to manage cashflow and when harnessed as a part of a long-term financial strategy, it can ensure that a business has an uninterrupted supply of working capital in the bank. As a result, invoice finance enables businesses to inject their own money into their investment plans, whether that’s recruitment, skills development, equipment or marketing.”

Time Finance’s plans to double their invoice finances sales team in 2023, with the recent appointments of Thomas Ludden, Tariq Bourdouane, Neil Fullbrook and Casey Baldwin, shows the rising popularity of invoice finance witnessed by alternative finance providers.

There are a number of reasons for the rapid expansion of invoice finance in the UK, but a key driver is an increase in the number of late-paying companies. In their research, Time Finance found that B2B businesses are owed an average of £250,000 in unpaid invoices and some wait up to 120 days for payments to come through.

Access to liquidity is more critical than ever for SMEs who are the backbone of the UK economy, with many traditional financing providers increasingly rejecting applications for cash. Reducing the funding available to SME businesses during tough economic periods only hurts it more at a time when demand for liquidity needs to be expanded and not reduced.

Rising inflation and interest rates, along with increasing energy costs, are also challenging small businesses this year, with many facing closure. Providing SMEs with a path to secure lending will play an integral part in the economy’s resurgence.

Invoice finance provides SMEs with a variety of benefits including flexibility, faster turnaround, scalable funding, higher borrowing potential, and mitigating payment risks. Smaller independent funders also have more flexibility than traditional providers and can take advantage of value-creating opportunities.

By embracing alternative financing options such as invoice finance, SMEs can not only survive but also thrive in a post-pandemic world, despite the current economic challenges they face.

By Lisa Laverick

Source: Asset Finance International

finance lending
cfnuk No Comments

Brokers poised for success in 2023, finds Time Finance roundtable

Market resilience and optimism continue to boost confidence amongst brokers and fuel plans for growth, finds Time Finance.

In a recent industry roundtable, the alternative finance provider invited a panel of leading Asset Finance brokers from across the country to discuss market predictions for 2023 and plans to assist recovery and growth of the UK SME market.

The conversation covered the vital role of technology and data, the specific training required to support the next generation of brokers and confidence for the year ahead.

The overriding outcome uncovered universal optimism from brokers as they told Time Finance of plans to expand their workforce and increase their headcount to keep up with the growing demand for finance from businesses. Upskilling existing employees through bespoke training packages and funder-led broker academies was deemed to be a key priority for the year ahead.

Discover our Asset Finance Broker services.

Across the board, investment plans were fuelled by a confidence in the recovery and strength of small-medium business community, who make up 99% of the UK economy. This included bringing in new systems, processes, and technology to quicken funding decisions and adopting a data-led strategy to uncover emerging trends and identify opportunities to offer additional support for clients.

Steve Nichols (pictured), Director Asset Finance at Time Finance, said: “We’re encouraged by the resilience and adaptability of the broker market as they set wheels in motion to invest, grow and bolster their support for SMEs in 2023.

“In the wake of rising costs, supply chain disruption and many other cashflow challenges hampering businesses right now, our roundtable comes at a crucial time and shines a light on the importance of helping businesses feel confident about their future. It’s fantastic to see such a remarkable ability from our brokers to pivot, adapt and innovate, which will only help to poise brokers and our collective clients for success in 2023.”

Amongst the attendees were Tom Roberts from Moorgate Finance, Carl Johnson from Anglo Scottish, George Parker from Halo Finance, Jack Smith from Love Finance, Ryan Williams from Victor Finance, Tom Perkins from Charles & Dean, and Rob Dermody from PMD Business Finance.

Steve added: “We look forward to hosting many more roundtables and continuing to bring together our valued broker network to discuss the future of finance for SMEs and how best we can support their ever-changing needs. And, as we continue to invest in our own offering and increase our support for SMEs, we too remain optimistic about the opportunities that lie ahead.”

By Lisa Laverick

Source: Asset Finance International