2 minute read
Cambridge & Counties Bank
Forward momentum
New opportunities and a drive in demand
Simon Hilyer Head of Asset Finance Cambridge & Counties Bank
The past two years have been very difficult for many UK businesses, impacted on all fronts by COVID-19 as well as the broader economic environment; with the uncertainty over Brexit causing significant disruption to normal working business practices, employees, customer demand, and investment.
With the Omicron variant potentially pausing the recovery, the challenges have not gone away. However, there is an expectation that 2022 will see a strong economic bounce back. Our discussions with commercial brokers and clients underscore a more positive, bullish sentiment with many SMEs and businesses that have paused investment now focused on growth.
How businesses finance this investment and capitalise will be key. Asset finance has remained a highly competitive, efficient means for firms to meet opportunities, build inventory, and to better position themselves for a more dynamic environment. As such, we firmly believe asset finance will be key for many businesses in a post-COVID world.
Working closely with brokers, we know that credit lines can be an appropriate, cost-effective solution for many businesses, helping to fund expansion plans or to release finance locked into fixed assets, providing a cashflow injection among other benefits.
Asset finance has historically helped SMEs invest in business-critical assets such as vehicles, construction equipment, plant and machinery, cranes, and computer numerical control (CNC) machinery. The relatively recent boom in hybrid and pure electric vehicles (HEVs and PEVs) has opened new opportunities and demand drivers.
To support UK businesses to transition to electric vehicles, Cambridge & Counties Bank began including PEVs as part of its highly competitive lending strategy and asset finance product suite back in 2020. Demand has been high and expected to continue. We have seen particularly strong demand in the construction sector.
The UK government is very keen to encourage firms to invest for growth, as evidenced by the £1 million Annual Investment Allowance that is currently available for qualifying assets until 31st March 2023. According to data from the Finance & Leasing Association, total asset finance new business in the ten months to October 2021 was 17% higher than in the same period in 2020. The plant and machinery finance sector reported new business up in October by 9% compared with the same month in 2020.
Cambridge & Counties Bank saw significant asset finance volume in FY2020, despite the impact of the pandemic. The Bank also provides finance for the purchase of classic cars through competitive finance solutions.
Given these sorts of metrics, in a more positive economic environment, we see asset finance delivering enhanced benefits to businesses. We recently announced a new asset finance promotion to kick-start growth, waiving the documentation fee for all asset finance deals drawn under a credit line until 31st March 2022.
Brokers and businesses have responded well to these sorts of initiatives in the past, helping many new firms see the benefits of asset finance as a dedicated funding option.
