The Finance and Leasing Association (FLA) says
it is “pleased” with Chancellor George Osborne’s autumn statement,
and has announced a scheme run in cooperation with the government
to make additional finance available to businesses using asset
finance delivery channels.
The FLA commended the government’s pledge –
known as credit easing – to underwrite bank loans to small
businesses, aimed at lowering the cost of borrowing, and the
initial availability of £1bn through the Business Finance
Partnership.
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Such measures, said Stephen Sklaroff, director
general of the FLA, “will cover alternative sources of finance for
small- and medium-sized businesses, including those of
non-banks.”
In the UK, £5bn of asset finance funding has
already been made available for equipment purchases by FLA members
in the third quarter of 2011, up 5% on the same period in 2010.
Total asset finance business stood at £2,003m
for September 2011, 4% up on September 2010, and £20,928m for the
year to September, up 8% on the previous 12 months.
September 2011 was a volatile time across all
asset classes, with business equipment finance down 10%, plant and
machinery finance down 15%, and aircraft, ship and rolling stock
finance down 19% compared with September 2010, while IT equipment
finance was up 35% and commercial vehicle finance 32%.
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By GlobalDataAll asset classes enjoyed a positive third
quarter and year-to-September compared to the same periods in 2010,
however. Exceptions were aircraft, ship and rolling stock finance
(down 66% in Q3, 42% down compared with the previous year), and IT
equipment (down 1% in the twelve months to September.)
Last week, addressing the FLA 8th
Annual Motor Finance Convention, Sklaroff said that the asset
finance market has “been showing steady growth, month-on-month, for
two years, from what was a pretty low base, except very big ticket
finance, north of £20m.”
Also speaking at the convention, Ruth Lea,
economic advisor, Arbuthnot Banking Group, warned that further
credit reduction in other sectors of the economy would affect
investment and growth.
Proven correct by the autumn statement in her
prediction that growth in 2011 would be “less than 1%”, Lea said
the housing market was expected to shrink by 1%, therefore
shrinking GDP and spending.
“Investment,” said Lea, “tends to follow
growth. Companies invest when they see demand for their products
improving.”
richard.brown@vrlfinancialnews.com
