Press Release

FLA and FPB make the case for leasing as a key driver of SME growth

3rd October 2006

FLA (Finance & Leasing Association) will tonight (3 October) jointly host a reception with the FPB (Forum of Private Business) at the Conservative Party Conference. The guest speaker at the event, whose theme is “Small Businesses: Thinking Big? – Finance for the Future” is Mark Prisk MP, the Conservative Shadow Minister for Small Businesses.

FLA’s Annual Survey of Business Finance revealed that members provided £27.2 billion of new finance in 2005 to the business sector and UK public services, representing over 30.4% of all fixed capital investment in the UK in 2005 (excluding real property). This represented a new record for new business – an increase of 6.4 per cent on 2004.

A major survey of small to medium sized firms commissioned jointly between FLA and FPB in 2005 found that asset finance was the second most popular form of finance, after cash, when investing in new equipment. Indeed, it was the most popular choice for investments between £25,000 and £100,000. The most commonly leased products  include HGVs/trucks and cars, vending equipment, photocopiers and telecoms.

FLA has been campaigning for many years for the SME capital allowances regime to be opened to leased assets, including, restored accelerated allowances for information technology. As we have made clear to the Chancellor, we believe the case for change to be compelling as the status quo is reducing SMEs’ propensity to invest.  Martin Hall, FLA Director General expressed his concern:

“The proportion of business finance provided by FLA members to SMEs has fallen from 53% of the total business finance provided in 2000 to 45% in 2005. That is a very worrying trend. We reiterate our plea to the Chancellor to open the SME capital allowances regime to leased assets in his forthcoming Pre-Budget Report.”

The Chief Executive of the Forum, of Private Business, Nick Goulding said

"Leasing can be a cost effective option for smaller businesses, particularly if they have not got the cash readily available to purchase, but need the equipment. It can also help small firms regulate cash flow more effectively because it involves predictable, regular instalments as opposed to a single lump sum payment. Leasing helps by avoiding tying up lines of credit and frees up resources to be used in other areas."