FLA: 33% of UK SMEs turning to asset finance

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FLA: 33% of UK SMEs turning to asset finance

Mike Symes - Wednesday 04.03.09, 09:08am

Asset finance accounts for one third of all UK SME financing, according to a new survey.

The survey, conducted for the Finance & Leasing Association (FLA) by the Open University Business School, reveals that 33 percent of UK SMEs are now using asset finance, compared with 25 percent in the third quarter of 2007.
Commenting on the results, Stephen Sklaroff, director general of the FLA, said: “Asset finance tailored to [SME businesses’] cash flow needs is a growing part of investment funding for such companies, and will be an important factor in helping the economy emerge from recession.”

Small firms in London have been hit the hardest by the economic downturn, according to the survey of just under 1,300 SMEs across the UK.
71 percent of small firms in London said they had suffered falling or stagnant sales in the fourth quarter of 2008; and nearly a quarter (23 percent) said this has led them to reduce headcount.

SMEs need to be taken seriously, not least because of their substantial contribution to UK PLC. Small businesses are facing very tough credit conditions and finding it difficult to get their bills paid on time. Invoice discounting, factoring and asset finance are all becoming essential tools to an SME’s survival.