Small businesses and vehicle finance: why it’s crucial to get their businesses on the road

Commercial Vehicles

Small businesses contribute significantly to the health of the UK economy. They make up a large, lucrative market. In fact, small businesses accounted for 99.3% of all private sector businesses at the start of 2016. Many of these businesses are made up of only one person – in 2016, sole traders accounted for 60 percent of the overall business population. At BNP Paribas Leasing Solutions, we understand the importance of small businesses, as well as acknowledge the financial challenges that many of them face.

For dealers in the commercial vehicles sector, small business owners are an important market, yet their cash flow may not allow them to afford the assets they need outright. The purchase of just one van for their business could be beyond them. However, by offering the right finance, you can tap into this large and lucrative market, as well as help them access the equipment they need.

Small business finance

For many small businesses in trades such as construction or plumbing, having access to a van is crucial to the success of their business. These business owners represent a huge market but all too often they are dismissed as small fry by financiers. This is an opportunity for your dealership to take advantage of: if you can prioritise these customers and provide them with finance that suits them, you’ll give the economy – and your business – an important boost.

The rise of the subscription economy, where businesses and their customers pay only for what they use, has reduced the importance of ownership in favour of access. There are plenty of successful examples to consider: Netflix, Airbnb, even your mobile phone contract. People are no longer interested in owning all the products and services they need – leasing is often a far more convenient and affordable solution.

What finance is best?

Small business owners have limited spending capacity, and are unlikely to have saved enough to buy a van outright – perhaps not even enough to cover the VAT. Our OptiVan Lease allows them to afford a van with a low upfront cost – and, unlike with hire purchase, they can spread the VAT across the length of the contract. That’s a great incentive for businesses that aren’t VAT registered – only 14% of sole proprietorships were registered for VAT or PAYE in 2016.

Customers can also choose to add a balloon payment. This will reduce their monthly repayments even more and enable them to afford a higher spec vehicle that will better serve their business. At the end of the lease contract, your customer will have a few options to consider. They can continue to use the vehicle and pay nominal secondary rentals. Or, they can sell it at market value and receive part of the sale proceeds.

OptiVan Lease is also better for your business. By providing small businesses with finance that doesn’t cost them a fortune, yet allows them to afford the vehicles their business depends on, you will forge strong customer relationships and attract new business within the sector. At the end of the lease the customer will likely go back to their dealer to discuss the end of term options, enabling you to potentially arrange a lease for a new van, and retain their business.

OptiVan Lease is specially designed for small businesses. The flexibility and affordability appeals directly to this small business market – OptiVan Lease is the perfect solution for a sector that’s always on the move, and enables you to plan your business future with confidence.

Contact us today to discuss how our financial solutions can successfully get your small business customers on the road.