Asset finance not sexy enough for you?

In a piece in CityA.M. in the Entrepreneurs Section, Mike Francis, head of Asset Finance at Investec is dismayed that the High Street banks don’t have the confidence to lend SMEs the money they need, so business owners end up trying to fund their companies’ growth on overdrafts and credit cards, storing up trouble for when the next downturn comes or not proceeding with the investment at all.

If it is equipment or vehicle assets the SME is after, asset finance should be the answer, but often the question is just not asked. Asset finance may not be sexy, but it’s always been there, and it’s emerging from backstage.

Part of the issue is that the big banks often don’t want to do deals under about £200,000, due to a combination of higher perceived risk and costs to serve. However, asset-backed finance is less risky for the lender compared to unsecured facilities visit this page. Given the perceived difficulties of accessing finance, small businesses will often access asset finance through an intermediary such as a broker. The broker will work in conjunction with the manufacturer or supplier of the equipment, and identify the most suitable funder from their panel to provide the loan at the point of sale.

Mike Francis notes that the fact that challenger banks are entering this market shows its increasing potential. His biggest beef is with lack of education – children should be taught personal or business finance, so when the time comes they are aware of the options they have. If every small company in the UK had the confidence to seek the finance they need to create just one job, Mike Francis believes it could solve our unemployment problem in a matter of years.