Shire Leasing, a company that provides lease finance to small businesses, has received an £80 million boost from an investment by the British Business Bank and the private sector. This is part of a wider UK government policy to make it easier to setup and start a small business. It should be noted that the British Business Bank has also partnered with leading peer to peer (P2P) lending platforms to channel funding to small business as the UK government reinforces their commitment to growing the economy by aiding the private sector.
In a public statement, government representatives stated that leasing finance and asset finance are increasingly important sources of finance for small and medium-sized enterprises (SMEs). It allows them to invest in assets or equipment for growth which they would not have been able to afford otherwise. The British Business Bank’s investment is its first structured as a block discounting facility and comprises £40 million from the British Business Bank, matched by £40 million private sector funding.
“Today’s investment is significant because it shows we are serious about promoting greater use of asset finance and alternative lenders. The market is heavily dominated by the big high street banks so competition is limited and innovation is slow, but by making these investments we can start to engineer long-term structural changes that benefit both businesses and the market.”
Based in Staffordshire, Shire already supports 11,000 SMEs across the UK, but today’s (9 October 2014) investment means it will be able double the level of finance it currently provides to firms. Shire leases enable small businesses to acquire a wide range of key assets including: telephone equipment, IT, catering equipment, and software; and they even help farmers fund the purchase of livestock and small wind turbines. The average lease size is £6,000 and the average agreement term is 48 months.
Business and Enterprise Minister Matthew Hancock said:
“Accessing the finance they need to start up and grow can be a major barrier for many businesses – but we are working hard to engineer a long-term sustainable change. We are committed to making Britain the best place in the world to start and grow a business and the Business Bank is an integral part of coming good on this. Over 30,000 businesses have already accessed finance through the British Business Bank and this new investment will be welcome news to thousands more.”
CEO of the British Business BankKeith Morgan, shared his belief in small business;
“We are delighted to be able to announce such a substantial capital contribution to the block discounting market, which is capacity constrained at this time. The British Business Bank is committed to easing the burden on the UK’s small businesses, and at a time when lending is still difficult to come by, this is another significant step in achieving that aim.”
The British Business Bank is working to promote a finance market that is not overly reliant on a small number of high street banks and debt finance. To date, the British Business Bank has already invested significant funds into alternative finance providers including peer-to-peer lenders Funding Circle and Ratesetter. Next week, the government will table amendments to the Small Business, Enterprise and Employment Bill which will require larger banks to refer a business to alternative lenders if they are declined for a bank loan.