The UK’s Finance & Leasing Association (FLA) has said the recent Funding for Lending Scheme (FLS) extension is necessary to boost lending to SMEs, after recent figures showed a slump in new business.

The FLA released data showing a 1% increase in new leasing business, excluding high value goods, for the year to March. However, this is in contrast with a 5% year-or-year decrease during the first quarter of 2013, and a 10% decline year-on-year for March itself.

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Julian Rose, head of asset finance at the FLA, said: "These figures demonstrate the importance of the recent extension of the Bank of England’s Funding for Lending Scheme."

"Leasing already helps approximately 750,000 UK small firms and accounts for 28% of UK fixed capital investment.

"The extensions to the Funding for Lending Scheme have the potential to boost the use of this option for many more businesses who want to grow."

Broken down into segments, IT equipment financing performed best over the year, up 13% compared to the previous twelve months, but was flat for the quarter and fell 12% in March.

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Car finance also performed positively, up 6% over the year, and 5% for the quarter, despite a 10% drop in March. Plant and machinery grew 4% over the year, but dropped 7% over the quarter and 9% for the month.

Business equipment finance and commercial vehicle finance both saw declines in the twelve months to March, dropping 12% and 2% respectively. Business equipment also fell 23% compared to the previous quarter and 24% compared to March 2012, while commercial vehicles dropped 10% for the quarter and 2% for the month.