Small businesses have been hit with another blow this week as ING has announced its exit from the UK leasing industry. Thousands of small businesses rely on this service for funding and investment. ING accounts for almost 40% of the funds available on the smaller end of the market so this represents a big setback for many SMEs needing alternative finance measures to stay on top.
The closure of the ING leasing branch represents a £1bn loss to the market. At a time where small businesses need all the help they can get this is the last thing that we want to hear. Many SMEs are relying on alternative means of finance as bank lending has become continually hard to access despite ongoing government schemes. ING was one of seven or eight active bodies in the leasing broker market.
Leasing agreements allow small companies to get hold of equipment such as vehicles and machinery without having to make the large up front investment. The broker arranges the purchase and the companies simply pays off the balance monthly. Almost a third of new investment in equipment has been paid for through leasing agreements. The closure of ING is expected to create significant disruption for a huge number of small businesses, and it is thought that leasing will become harder to access as well as becoming more expensive.
Alternative finance such as leasing is becoming central to the way many small businesses operate. Any closures will upset the already fragile atmosphere of small business lending. There are other options, such as invoice finance, which can help to improve cash flow and reduce the impact of late payment. At a time when we want alternative finance to be helping more, not less, small businesses, news such as ING closures are the last thing we want to hear – it’s more important than ever to know all the options that are out there.