Asset Finance Explained
Asset finance is experiencing a significant uptick in popularity among UK businesses. This finance solution allows companies to acquire essential equipment, vehicles, or machinery without the hefty upfront costs.
The latest figures from the Finance & Leasing Association (FLA) reveal that more and more companies are using Asset Finance, with funding increasing 10% in February 2024 compared to February 2023.
Asset Finance helps businesses acquire the assets they need. Through Asset Finance, businesses can either pay for assets in instalments or lease it over an agreed period of months or years. This finance option means that businesses can fund something as large as a lorry or heavy machinery, or as small as a camera or mobile phone (and everything in-between).
It can even pay for intangible assets like branding collateral (logos, signage, etc) and software licences.
We’ve looked at the FLA’s numbers for the past twelve months to find that they paint an interesting picture of UK businesses’ current priorities.
Businesses are prioritising vehicle funding
According to the FLA’s figures, in the twelve months up to February 2024, there’s been a decline in asset funding for:
- Plant and machinery finance (-8%)
- IT equipment finance (-25%)
- Business equipment finance (-5%)
But over the same period, there’s been noticeable growth for:
- Commercial vehicle finance (10%)
- Car finance (35%)
- Aircraft, ships and rolling stock finance (11%)
So, it’s clear that businesses’ funding priorities are currently steering towards acquiring vehicles. Whether that’s Commercial Vehicle Finance, which can assist with business operations such as transport and logistics or other industry-specific vehicles or Vehicle Finance, which more typically covers director vehicles and company cars.
How much do businesses spend on Asset Finance?
The figures show that Asset Finance funded over thirty-four billion pounds worth of business assets in the 12 months up to February 2024. A whopping figure that demonstrates how essential Asset Finance is for the UK business community. This number breaks down as:
- Plant and machinery finance (£7,593M)
- Commercial vehicle finance (£10,026M)
- IT equipment finance (£1,184M)
- Business equipment finance (£1,870M)
- Car finance (£13,603M)
- Aircraft, ships and rolling stock finance (£327M)
Will the use of Asset Finance continue to rise?
The FLA except more growth to come, driven by the demand for vehicle funding, but there’s still a sense that business spending is subdued due to ongoing uncertainty in the economy.
The use of brokers is also on the rise
The FLA’s figures also show that more finance is being secured through brokers, with 7% growth in the twelve months to February 2024.
This isn’t surprising, as working with a broker can give you a lot more financing option. In fact, many commercial lenders in the UK will only accept broker-introduced applications. In practice, this could lead to you securing more competitive interest rates on your acquisitions.
Brokers also offer your business the best chance of success. For example, as experts in Asset Finance, Origin know the lender landscape and can quickly match your business needs with the most suitable lenders and products.
We’ll do the paperwork, making sure that your application is presented in the best possible light, saving you time and effort, and helping you to achieve your financing goals.
Looking to finance some assets? Get in touch for a free, no-obligation quote today.
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