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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.

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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

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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.

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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

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Asset finance new business grew by 14% in March 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 March 2023 by 14% compared with the same month in 2022. In Q1 2023, new business was also 14% higher than in Q1 2022.

The business new car and commercial vehicle finance sectors reported new business up in March by 54% and 23% respectively, compared with the same month in 2022. The plant and machinery finance sector reported new business growth of 20% over the same period.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said: “The asset finance market reported a record level of monthly new business in March of more than £4 billion. Inflationary pressures have contributed to higher average advances across asset finance sectors, but volumes have also either grown or been maintained.

“Our latest figures show the vital support the asset finance industry is providing for business investment across the UK economy. New asset finance lending to SMEs remained robust, growing by 22% compared with March 2022. New lending to all major industry sectors – manufacturing, construction, agriculture, and services – also increased in March.”

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 March 2023% change on prev yr3 mths to March 2023% change on prev yr12 mths to March 2023% change on prev yr
Total FLA asset finance (£m) 4,216 149,4581434,9798
Total excluding high value (£m) 4,018 278,9672133,37011
Data Extracts:
By asset:
Plant and machinery finance (£m) 931 202,089138,0528
Commercial vehicle finance (£m) 1,098 232,517199,2009
IT equipment finance (£m) 143 -58322-371,387-18
Business equipment finance (£m) 200 -14469-71,913-3
Car finance (£m) 1,412 463,0263910,50220
Aircraft, ships and rolling stock finance (£m) 37 4786-38306-23
By channel:
Direct finance (£m) 1,761 404,10733 14,95017 
Broker-introduced finance (£m) 912 22 2,085 19 7,825 14 
Sales finance (£m) 1,345 17 2,775 8 10,595 2 
By product:
Finance leasing (£m) 359 -8 846 3 3,433 6 
Operating leasing (£m) 952 56 2,110 517,052 15 
Lease/Hire purchase (£m) 2,38415 5,235 12 19,662 10 
Other finance (£m) 376 -19 967 -12 3,620 -3 

By Louise Clavey

Source: Asset Finance International

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Asset finance market sparks recovery in March, but still down on pre-pandemic levels

Total asset finance new business grew by 15% in March 2021 compared with the same month in 2020, reaching £3.2 billion, according to the Finance & Leasing Association (FLA).

However, due to the national lockdowns in March 2020, a more accurate depiction of how the market is performing can be drawn by comparing it to March 2019.

By doing this, we can see that the asset finance market is still 12.6% down from the pre-pandemic levels in March 2019.

Other key points from the FLA’s announcement included:

  • Business equipment finance has decreased the most from March 2019, down 18.7%;
  • This is followed by commercial vehicle finance, which is still operating at a 13.6% reduction.
March 2021% change from March 2020-21March 2020% change from March 2019-21March 2019
Total FLA asset finance (£m) 3,217+15%2,793-12.6%3,679
By asset:
Plant & machinery finance (£m) 649+13%575-10.9%728
Commercial vehicle finance (£m) 859+22%705-13.6%994
IT equipment finance (£m) 198-18%242-6.2%211
Business equipment finance (£m) 205+14%184-18.7%252
Car finance (£m) 908+9%832-8.6%993
By channel:
Direct finance (£m) 1,236-3%1,286-27.8%1,711
Broker-introduced finance (£m) 718+42%507+9.1%658
Sales finance (£m) 1,054+18%891+2%1,033

However, one benefit of comparing the market to March 2020 is that it offers an insight into how successfully the market has adapted to meet the challenges of the pandemic.

In this case, commercial vehicle finance grew the most from March 2020, marking an increase of 22% to £859 million. This could mean that the commercial vehicle finance market has adapted the best to operating under the restricted conditions, alternatively it could mean that businesses are prioritizing this form of finance over others and so more cash can be generated in this sector.

Geraldine Kilkelly (pictured above), director of research and chief economist at the FLA, said: “March saw the asset finance market report its highest monthly new business total since June 2019. A year on since the introduction of the first restrictions to deal with the pandemic, the market and wider economy continue to be impacted by ongoing restrictions. However, the latest set of figures show that the industry has adapted to meet the challenges posed by the crisis.”

In the three months leading up to March 2021, the market achieved £7.6 billion, still 10.4% under the same period in 2019. Similarly, whilst the market achieved £27.42 billion in the 12 months leading up to March 2021, this was still 18% down compared to March 2019.

 3 months to March 2021% change from 201912 months to March 2021% change from 2019
Total FLA asset finance (£m)7,603-10.4%27,420 -18%
By asset:
Plant & machinery finance (£m) 1,704-8.4%6,011-15%
Commercial vehicle finance (£m) 2,036-8.7%7,137-15%
IT equipment finance (£m) 518-15.4%2,334-16.9%
Business equipment finance (£m) 449-28%1,698-36.4%
Car finance (£m) 1,948-11.8%7,171-19.8%
By channel:
Direct finance (£m) 3,080-21.5%11,955-22.8%
Broker-introduced finance (£m)1,626-1%5,554 -12.6%
Sales finance (£m) 2,259-1.5%8,022-13%

Written by Miles Rogerson

Source: Asset Finance International

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UK asset finance market posts strong Q3 results as businesses stockpile in anticipation of Brexit

Asset finance new business (primarily leasing and hire purchase) grew 5% during Q3 2019 compared to the same period last year, according to figures from the Finance & Leasing Association (FLA).

The association also reported 5% year-on-year growth during September.

The strongest September growth came from finance for plant and machinery and business cars, while aircraft, ships and rolling stock finance leapt 78%, but from a relatively low base.

In contrast, commercial vehicles remained flat during the month, although demand was up 8% for the quarter and 14% over the preceding 12 months.

IT equipment finance fell 10% and business equipment finance was down 1% during the month compared to the same period in 2018.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “In September, the asset finance industry reported its strongest growth in new finance for plant and machinery since January 2019 as businesses stockpiled ahead of another Brexit deadline.

“The industry has seen total new business grow in all but one month so far in 2019, with the latest annual new business total reaching a record level of £34.5 billion.”

Lease/hire purchase remains the dominant form of finance, accounting for 57% of the market in September and reporting year-on-year growth of 4%.

Sep 2019 % change on

prev yr

 3 mths to

Sep 19

 % change on

prev yr

 12 mths to

Sep 19

 % change on

prev yr
Total FLA asset finance (£m); 2,907 +5 8,454 +5 34,474 +7
Total excluding high value (£m) 2,688 +5 7,862 +5 31,959 +5
By asset:
Plant and machinery finance (£m) 623 +15 1,850 +9 7,445 +12
Commercial vehicle finance (£m) 730 0 2,148 +8 9,098 +14
IT equipment finance (£m) 309 -10 757 -8 2,663 -6
Business equipment finance (£m) 180 -1 1,584 -4 2,597 +5
Car finance (£m) 712 +4 2,160 +4 8,965 0
Aircraft, ships and rolling stock finance (£m) 20 +78 87 +71 541 +126
By channel:
 Direct finance (£m) 1,217 -1 3,859 +4 16,062 +6
 Broker-introduced finance (£m) 541 +4 1,623 +5 6,616 +12
Sales finance (£m) 930 +15 2,380 +6 9,281 +1
By product:
Finance leasing (£m) 405 -8 1,064 +2 4,256 +7
Operating leasing (£m) 501 +1 1,473 0 6,103 -1
Lease/Hire purchase (£m) 1,566 +4 4,718 +8 19,497 +10
Other finance (£m) 280 +20 877 +5 3,313 +8

Written by John Maslen

Source: Asset Finance International

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Asset finance share of UK equipment investment highest for a decade in May

Asset finance new business (primarily leasing and hire purchase) in the UK for deals of up to £20 million grew by 6% in May, compared to the same month last year, according to new data from the Finance and Leasing Association.

When deals over £20 million are included, the market fell by 1%.

New finance for plant and machinery and commercial vehicles both grew by 8% year-on-year during the month, while the business equipment finance sector reported new business up by 3% over the same period.

The car finance market was static, while the IT finance sector fell by 9% year-on-year.

Geraldine Kilkelly, Head of Research and Chief Economist, said: “The asset finance market continued to report growth across many sectors in May, with new business overall up by 8% in the first five months of 2019.

“The strong performance so far this year means that the industry is helping to fund an increasing share of business investment.

“The percentage of UK equipment investment funded by asset finance members in Q1 2019 was 38%, the highest for more than a decade.”

Written by John Maslen

Source: Asset Finance International

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UK asset finance market grows by 11% in first quarter of 2019

Asset finance new business (primarily leasing and hire purchase) grew by 11% during Q1 2019 compared to the same period last year, according to new figures released today by the Finance & Leasing Association (FLA).

New finance for manufacturing and construction equipment increased by 25% and 26% respectively, compared to Q1 2018.

The growth followed a strong market in March, which grew by 11% year-on-year, with including particularly high growth in commercial vehicle finance and IT equipment finance sectors.

All channels delivered growth during the quarter, although the strongest performance came from broker-introduced finance, which rose 19% year-on-year.

During March, broker-introduced finance accounted for 19% of sales, up from 18% for the same period last year, while direct finance took 50%, down from 51%, and sales finance 30%, down from 31%.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market reported a record level of monthly new business in March and the strongest quarterly growth in Q1 2019 since Q3 2016.
“Asset finance continued to support key sectors of the economy in the first quarter.”

March 2019 % change on

prev yr

 3 mths to

March 2019

 % change on

prev yr

 12 mths to

March 2019

 % change on

prev yr
Total FLA asset finance (£m) 3,679 +11 8,490 +11 33,447 +7
Total excluding high value (£m) 3,403 +7 7,861 +9 31,069 +5
By asset:
Plant and machinery finance (£m) 728 +11 1,861 +12 7,055 +8
Commercial vehicle finance (£m) 994 +17 2,231 +23 8,402 +14
IT equipment finance (£m) 211 +5 612 +18 2,808 +19
Business equipment finance (£m) 252 -1 623 +2 2,670 +5
Car finance (£m) 993 -3 2,209 +2 8,940 -3
Aircraft, ships and rolling stock finance (£m) 111 +238 147 +122 392 -12
By channel:
Direct finance (£m) 1,711 +5 3,926 +7 15,492 +4
Broker-introduced finance (£m) 658 +19 1,642 +19 6,354 +16
Sales finance (£m) 1,033 +3 2,293 +5 9,223 +1
By product:
Finance leasing (£m) 429 +6 1,040 +14 4,220 +11
Operating leasing (£m) 645 -10 1,447 -6 5,894 -9
 Lease/Hire purchase (£m) 2,006 +9 4,756 +15 18,769 +11
Other finance (£m) 439 +53 963 +24 3,240 +7

Written by John Maslen

Source: Asset Finance International

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UK asset finance market remains on track for record year

Growth in asset finance new business (primarily leasing and hire purchase) for the UK remained stable towards the end of last year as the industry prepared to make a record year.

New figures released by the Finance & Leasing Association (FLA) for November show that plant and machinery finance and business equipment finance sectors grew 9% and 8% respectively compared to the same period last year.

Overall growth was slowed because finance demand for business cars and IT equipment fell by 6% and 32% over the same period.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market’s performance in November means the industry remains on track to report a record level of new business in 2018 as a whole.

“The percentage of UK investment in machinery, equipment and purchased software financed by FLA members reached 32.2% in the twelve months to September 2018, a nine-year high.”

Source: Asset Finance International

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Brokers overcome uncertain economy to guide UK asset finance market towards record levels

Asset finance new business (primarily leasing and hire purchase) grew by 9% in October, compared with the same month last year, pushing the market closer to an all-time record, according to new analysis.

Latest figures from the Finance & Leasing Association (FLA) show that the plant and machinery finance and business equipment finance sectors had particularly strong new business growth, rising 16% and 29% respectively, compared with October 2017.

New finance for commercial vehicles increased by 23% over the same period.

For the 12 months to the end of October, asset finance demand has grown 9% compared to the previous 12 month period, or 3% excluding high-value items.

Growth has come almost entirely from broker-introduced finance, which was up 22% in October compared to the same period last year and 12% over the past 12 months.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market made a strong start to the final quarter of 2018, with new finance for construction and agricultural equipment up in October by 27% and 19% respectively, compared with the same month in 2017.

“Asset finance new business in 2018 as a whole is likely to reach a record level, despite continued economic uncertainty weighing on business investment.”

Source: Asset Finance International