In Focus Commercial Credit
Firms urged to capitalise on rates for asset finance
Businesses are currently cautious about borrowing to grow, right at the time when the opportunities exist
Karina Gallagher Managing director, Hornby Commercial
Lenders battling for the custom of Brexit- wary SMEs are offering some amazingly competitive deals. There has been a huge shift in the landscape in recent weeks, with lenders aggressively pricing funding to win business.
Backdrop It comes against the backdrop of many businesses holding back on accessing funding to invest in assets as they await the outcome of Brexit. But now may be the best time to act,
especially for companies operating in sectors where vehicles are a core part of the operation. For strong businesses, I am seeing some
extremely attractive rates as the lenders compete for these deals. Lending at the moment, particularly in
the transport sector is incredibly cheap, so for a business looking to buy, say a coach, a HGV or something similar, now is a very good time to take action.
Two-year high SME borrowing reached a two-year high in June, increasing by £375m, a growth rate of 0.8%, figures from the Bank of England revealed. Borrowing by firms increased overall by £2.5bn in June and during the first half of 2019, borrowing was stronger than the same period in 2018. But there has been a marked slowdown
in SME lending in the last quarter, much of it must be attributed to a lack of certainty over the UK’s exit from the EU.
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Any decision to invest must, of course, be backed by a sound financial plan and projections. And if it is not right for the business for any reason, I see a part of my job as communicating that. But with rates this low, if the time is right, it is right regardless of the hand played by the prime minister in Europe
Lack of confidence A lack of confidence is leading a majority of businesses to postpone the implementation of growth or investment plans. But that presents an opportunity for the
bold to capitalise by investing while their peers and competitors do not. It is understandable that many businesses
have Brexit-induced jitters, but what that means is there is a real chance here for those companies who have the courage of their convictions to really thrive. Putting investment off until such a time
that everyone decides the climate is right only means you follow the pack.
Sound planning Any decision to invest must, of course, be backed by a sound financial plan and projections. And if it is not right for the business for any reason, I see a part of my job as communicating that. But with rates this low, if the time is right,
it is right regardless of the hand played by the prime minister in Europe.
Allowance Business owners are also being encouraged to consider that the government’s Annual Investment Allowance (AIA) is currently under a temporary uplift to £1m until 31 December 2020. This means that there can be significant
additional tax benefits of investment during this period that will not be available when the AIA limit reverts to its usual £200,000 on 1 January 2021. CCR
December 2019
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