Business leasing hits five-year high as asset finance continues popularity surge

Businesses in the UK are increasingly turning to asset finance to invest in business equipment, according to a new study which showed a five-year high in leasing.

Figures released today by finance provider LDF showed the amount borrowed by businesses across the 2013/14 tax year  hit £23.7bn, a 10% increase on last year’s figures.

Asset finance is a funding method in which businesses borrow the cost of a capital investment by pledging some of their assets as security.

LDF said many small and medium-sized firms were using asset finance to fund purchases such as updating IT systems, refitting their offices, and purchasing new vehicles.

It claimed asset finance’s growth in popularity was at the expense of traditional lending methods, which small businesses have found more difficult to secure following the recession.

Peter Alderson, managing director of LDF, said: “More businesses are using leasing to invest in assets to drive growth, and that’s a sign that an increasing number of small and medium-sized firms are recognising its benefits.”

“As the economy improves, small and medium-sized firms are seeing order book growth, and are looking to catch up on several years of delayed investment. While many other forms of lending remain relatively constrained, the availability of asset finance makes it hugely attractive in comparison.”