Asset Finance: ‘An untapped solution for SMEs looking to grow’
New data from Time Finance has revealed only 24% of UK SMEs are using asset finance to fund their equipment purchases, shining a light on the business community’s awareness and understanding of alternative finance solutions.
Surveying 500 SME decision makers from across the UK, Time Finance’s Finance Apathy Survey found that while general awareness of asset finance was high – with 79% of businesses familiar with the solution – 76% of businesses are opting out of its benefits.
The independent lender’s research, carried out in partnership with Censuswide, also found that only 24% of businesses are utilising asset finance to fund their growth, and 21% are not aware of the solution or its benefits at all.
Despite these figures, recent data by the Finance and Leasing Association (FLA) found that total asset finance new business grew by 3% to reach a record level of £39.7b in 2024.
When viewed in detail however, the FLA’s data found increases of 14% and 4% for car finance and plant and machinery respectively, but a 4% decrease in commercial vehicle finance.
Steve Nichols, managing director of asset finance at Time Finance, comments: “What’s clear to see from our recent data is more businesses are aware of asset solutions than we might realise, but we are seeing a gap between people’s awareness and their use of this product, particularly for financing new equipment. It’s important to understand why that gap is there. With over half of businesses opting out of asset finance, the concern is that they’re also missing out on the potential for growth. With the government’s recent budget relying heavily on business taxation to raise £40bn in extra revenues, many are operating without huge cash reserves meaning that asset finance has never been more important for UK businesses.
‘While the FLA figures point towards growth in overall asset finance over the past year, the detail of their data shows growth in vehicle finance but a slowing momentum in plant and machinery and a decline in commercial new vehicle finance. Their data suggests 1/3 of UK investments in machinery, equipment and vehicles were provided through the asset finance industry in 2024, which is positive and shows there is appetite amongst businesses. That said, as momentum in equipment purchases slows, we need to help SMEs understand the value in using asset finance for plant and machinery purchases.
“As a specialist tool for businesses, asset finance can help fuel the expansion of operations or the introduction of new product lines. For so many businesses there is a want to make these investments, but without the capital their options are limited. In scenarios such as these, asset finance allows businesses to access equipment in an affordable and manageable way.”