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Asset Finance for IT Investment

According to new research, many UK businesses are opting for asset based finance over traditional bank loans. As they are looking to invest in their businesses in order to achieve growth, many are looking for more accessible options than loans and overdrafts. Syscap, an IT equipment firm, has shown that many more businesses are now looking to asset based finance in order to fund purchase of equipment, particularly technology.

Asset finance used by businesses to acquire IT solutions and software has increased to 26% of SMEs, valued at around £1.344bn in the past 12 months. This is up from £1.069bn last year showing a definite move towards greater use of asset based finance by the UK’s small businesses. This rapid growth of asset finance, including leasing, to fund investment in IT is even outpacing the growth of the rest of asset finance, which was around 3% in the same period.

Asset finance is becoming an increasingly important source of funding. Access to funding via the banks is hard to come by, despite ongoing government efforts to get the banks lending again. Indeed, overall lending by banks to UK businesses is continuing to fall, down by 2.8% in the last 12 months. This reduction in traditional lending is hitting SMEs hard, limiting potential for growth. Now that asset based finance is becoming more widely used, hopefully this will start to boost investment as it becomes more widely known.

Syscap Chief Executive Philip White commented; “Businesses have under-invested in IT equipment because of uncertainty in the economy and because bank funding for IT investment has been so hard to secure. Some banks have also been unwilling to lend money for IT solutions because they no longer have the specialist skills required to understand the risk and long term value involved in lending against IT assets.”

Hopefully asset finance can plug the gap, helping more small businesses start to invest in their IT systems again.

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