Asset finance opportunity afforded to small businesses

Hitachi Capital and the British Business Bank have agreed a £300 million facility to increase asset finance for small businesses.

The transaction is the first of the British Business Bank’s innovative new ENABLE Funding Programme, which aims to increase significantly the supply of leasing and asset finance to smaller businesses in the UK.

The European Investment Fund will guarantee 50 per cent of the facility.

Gavin Wraith-Carter, general manager of Hitachi Capital Business Finance says, ‘Being the first funder to take part in an ENABLE Funding Programme transaction reinforces our commitment to understanding the specific needs of SMEs and offering tailored financial solutions that fit their business requirements. ‘

Reinald de Monchy, managing director of Wholesale Solutions at the British Business Bank adds there are plans for a number of further transactions over the next 18 months, and to refinance these facilities through securitisation once they achieve the required critical mass.

Bernard Skivington, director of Wholesale Solutions/Asset Finance at the British Business Bank, says, ‘Asset finance is vital to many high-growth small and medium-sized businesses. As these businesses grow and scale-up they will look to buy or replace plant and equipment, and it is essential that they are able to get the funding they need to do so.’

Using asset finance means business can access working capital and manage their cash flow – and that flexibility can make a real difference to growth plans, says Simon Goldie, head of Asset Finance at the Finance & Leasing Association. ‘We hope today’s announcement will be the first of many to help even more SMEs access the funding they need.’

In order to build the critical mass necessary to securitise the assets, the ENABLE Funding Programme will be announcing similar agreements with other funders over the next 18 months.

Facilities will range from around £25 million to £150 million, and the programme will aim to refinance the warehouse facilities when receivables total approximately £300 million.

This refinancing, said to be the first such transaction of its type in the UK, will allow institutional investors access to a large and highly diversified pool of SME debt, and is intended to help kick-start asset finance securitisation more widely.

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