SMEs choosing challenger and specialist lenders to support investment

Commenting on the British Business Bank’s Small Business Finance Markets Report for 2022/23, Simon Goldie, Director of Business Finance at the Finance & Leasing Association (FLA) said: “The fact that SMEs are increasingly choosing to borrow from challenger and specialist lenders underlines the importance of having a broad spectrum of providers to ensure that much needed finance reaches all corners of the economy.

“The report also revealed that the asset finance market saw record levels of new business in 2022. Leasing and hire purchase are popular products with SMEs – they make good business sense.

“In the current economic conditions, firms may want to maintain some flexibility with their cash flow. Depending which sector they operate in, they may not want to buy an asset outright if they operate in a high tech industry where obsolescence is a factor or if they only need it for a few months at a time.

“Because of the inherent flexibility of asset finance, it is all the more frustrating that the Super-Deduction does not include these options.

“The FLA and seven other trade bodies have written to the Chancellor recommending that a new Green Super-Deduction replaces the existing programme when it comes to an end in March.

“This would help to address an additional finding in the British Business Bank’s report – that Net Zero deals are concentrated in London. Net Zero is a national issue, and firms across the country need finance options that work with the grain of their business.”