For customers with a tax year ending on 31st March, the time to review capital equipment expenditure for the current financial year is now. This will include most sole traders and individuals trading within a partnership. There is, however, a need to act fast. There are two generous capital allowance schemes available under a hire purchase agreement. In order to qualify, any equipment concerned must be on site and available for use within the financial year in which the allowance is claimed.

For those businesses in the final quarter of their financial year, the two allowances referred to above enable the full capital allowance of a newly acquired asset to be offset against tax in this financial year. The added benefit is that, under a hire purchase agreement, payment for the equipment concerned can be spread over a number of future years. The two schemes are:

 

Annual Investment Allowance

 

A capital allowance equating to 100% of the cost price of a qualifying asset can be claimed against tax in the year of acquisition. This allowance has a cap of £1,000,000 for the calendar year 2022. It is available on new and used equipment and can be claimed against both income and corporation tax. This means that all business trading styles can benefit from the scheme.

 

Super-Deduction

 

A capital allowance equating to 130% of the cost price of a qualifying asset can be claimed against tax in the year of acquisition. You read it correctly! This scheme allows a business to claim a tax allowance on a sum that is 30% more than the actual cost of the asset. By any standard, this is one of the most generous tax allowances ever introduced.

 

Whilst there is no cap on the amount of expenditure allowed under this scheme during 2022, the allowance can only be claimed against corporation tax. This means it is not available to sole-traders and partnerships. Unlike the annual investment allowance, super-deduction is available for new equipment only. It is also worth pointing out that it cannot be claimed in cases where assets are purchased for onward hire.

 

Cars cannot be included for either allowance, but commercial vehicles, plant and machinery all qualify, subject to the conditions described above.

 

Many businesses have a financial year ending March 2022, and this can act as a powerful and immediate incentive to bring forward capital expenditure to reduce any current tax liability. To benefit from these allowances before the end of their financial year, a business needs to ensure that any qualifying equipment, acquired by way of a hire purchase agreement, is ordered and delivered during the current quarter.

 

A hire purchase agreement allows businesses to acquire the equipment they need now and get the full benefits of the generous capital allowances currently available, without the need for a large cash outlay. In other words, businesses can get the tax allowances in their current financial year but spread the cost of purchase over a number of future years. A further point to note is that the interest element on a hire purchase agreement can also be offset against tax as a business expense. This means that for companies expecting to see an increase in corporation tax from 19% to 25% from April 2023, the real cost of any hire purchase agreement signed this year will reduce from that date.

 

In conclusion, and providing stock is available, there are many businesses that have a strong financial incentive to bring forward the acquisition of capital equipment. This means they will be able to retain cash for investment elsewhere. Capital allowances claimed now, on equipment subject to hire purchase agreements, provide the perfect solution.

 

Disclaimer
BNP Paribas Leasing Solutions is not authorised to provide tax advice. You should consult an accountant in order to understand the tax consequences of any investment decision.

Andy MilsomAndy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

enquiryWe are committed to your business growth.

Our competitive finance solutions can help you capitalise on new opportunities. Contact us today to discuss your needs with a member of our team.

The Chancellor of the Exchequer presented his budget on 27 October, claiming that the measures being taken, along with the support already provided to individuals and businesses (during the lockdowns between March 2020 and July 2021), would give the UK Economy every opportunity of prospering in the ‘Post-Covid World’.

Most notable so far as capital equipment sales are concerned was a decision to extend the £1,000,000 Annual Investment Allowance from 30 December 2021 until 31 March 2023, at which time Super-Deduction is also due to end.

  • The construction sector is set to prosper from increased public spending to fund road building and public transport links.
  • Some of the additional funding earmarked for the NHS will also be allocated for the acquisition of the latest technology, in areas such as diagnostics, which will provide new sales opportunities for manufacturers and suppliers of medical equipment.

Perhaps more significant than the Budget Policy announcements was the report that accompanied the Chancellor’s statement by The Office for Budget Responsibility (OBR). Chancellors use data from the OBR to assess how much money governments have available to spend on public services or to cut taxes. In this case, the OBR were able to report that economic growth was running at a faster rate than predicted earlier in the year, giving the Chancellor a £33 billion reduction in the level of expected borrowing over the mid-term. Half of this will be used to help fund additional public spending and the rest held in reserve for possible further increases in spending or pre-election tax cuts.

Given the large change in economic growth forecasts from March to October this year, there is of course a strong chance of further amendments to the current forecast, as we move through next year. The downside? The risk from an extended period of high inflation and associated increases in interest rates, as well as the potential for prolonged supply-side disruption caused by shortage of stock and labour. Some or all of these factors could reduce the predicted rate of economic growth in 2022, with high inflation being a particular threat, since it reduces the spending power of those consumers who do not receive a correspondingly high uplift in their income. Also, a further risk is that Covid will return with all its associated risks to the Economy and cannot be ruled out.

It is perhaps for these reasons that the Chancellor is holding onto some of the windfall presented by the OBR.

Leasing and Asset Finance can be very useful tools in overcoming the challenges presented by a higher level of price inflation and an environment where interest rates are rising.

Disclaimer
BNP Paribas Leasing Solutions is not authorised to provide tax advice. You should consult an accountant in order to understand the tax consequences of any investment decision.

Andy MilsomAndy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

enquiryWe are committed to your business growth.

Our competitive finance solutions can help you capitalise on new opportunities. Contact us today to discuss your needs with a member of our team.

Dave Rainer, Director at Sussex-based Crusader Vehicles Ltd (also known as Crusader Vans), gives an insight into how the business has weathered the past 18 months and looks ahead to more settled trading conditions.

Dave Rainer (DR): We established Crusader Vehicles in 2004 with a focus on LCV sales, primarily funded on hire purchase and leasing products. BNP Paribas Leasing Solutions UK has always been an integral part of the Crusader operation as a long-standing finance partner.

BNP Paribas Leasing Solutions (BNPPLS): How have the events of the last year and a half impacted your business and what steps have you taken to overcome the challenges?

DR: At the start of lockdown, like most vehicle sales operations, we were faced with a great deal of uncertainty as customers rushed to postpone their orders or cancel entirely, citing the prospect of months without income. The situation worsened as some of our other funding partners removed products from their offering, ran on skeleton underwriting teams, or put a hold on new business.

Our immediate challenges came in the form of postponed deliveries, whilst dealers awaited government advice on how to deliver in a Covid-safe manner. We, like most brokers, were inundated with calls regarding payment holidays, and dealing with concerns from customers who had vehicles on order, amidst financial worries caused by the closure of businesses.

Thankfully in the years prior to Covid, we had invested heavily in our IT systems, allowing us to ensure that the team could work from home with little interruption, which minimised downtime, and went from a weekly to a daily meeting to make sure that everyone could keep in touch as a group, helping to share information and ideas.

BNPPLS: Looking ahead, how do you see the next 12 months?

DR: In the coming 12 months we foresee difficult trading conditions continuing, as demand continues to outweigh supply. However, manufacturer and dealer relationships that we have developed in the past 17 years have enabled us to weather the storm, and we feel confident that this will continue in to 2022 and beyond.

BNPPLS: How long have you been working with BNP Paribas Leasing Solutions?

DR: We have been funding LCV products through BNP Paribas since 2006. BNP Paribas supports us with front line assistance from our Partner Account Manager, Debbie Kimberley, and regular contact from our Area Sales Manager, Tim Blain. Our team have also taken advantage of the Finance Unlocked webinars available from Andy Milsom.

BNPPLS: How did BNP Paribas support you during the pandemic and how do you see the relationship developing?

DR: Throughout the initial part of ‘lockdown 1’ we found the ‘business as usual’ approach by BNP Paribas helped us to keep quoting, provide a relatively quick decision, and keep the business open for sales, not just customer service. Whilst some of our other funding partners had closed telephone lines, given long SLAs for email response, and had been very cautious to any new business, the help provided by BNP Paribas was, and continues to be, second-to-none. The consistency and availability of staff to answer our queries and underwrite our proposals has meant that we were able to continue to service our customers throughout the pandemic and ensure we were ahead of the game as business volumes ramped up.

Over the years and particularly in these recent times, BNP Paribas has demonstrated the true value and meaning of being ‘partners’ and long may this continue.

enquiryWe are committed to your business growth.

Our competitive finance solutions can help you capitalise on new opportunities. Contact us today to discuss your needs with a member of our team.

In a world where the virus itself is talked about less and less we seem to be feeling the knock-on effects more and more. The LCV market challenges around stock continue, with no end in sight for the issues caused by the shortage of semiconductors and other key raw materials.

The motor market continues to feel the effect of uncertain and limited supply – the car market experienced its weakest September since 1998, whilst the LCV market met its lowest September figures since the recession of 2009. The sector was down nearly 42% when compared to the pre-pandemic average.

It should be noted that these figures are on the back of a record August for the sector in what is usually the quietest month of the year. There is no doubt that the difficulties will not be over for some time and some experts predict as late as Q4 2022 as a best case.

Chief Executive of the SMMT commented,

September was a disappointing month for new van registrations, as the much-documented semiconductor shortage has started to impact supply. Manufacturers are doing all they can to fulfil orders and, after a strong year so far, demand still remains high. With businesses continuing to renew their fleets, there is a greater choice than ever of new zero emission models coming to market, helping ensure the commercial vehicle sector plays its part in decarbonising road transport.

[Source: Mike Hawes, Chief Executive SMMT, ssmt.co.uk]

Aligned to the stock shortage is the requirement to reduce emissions within the sector. We are seeing the momentum for Electric Vans building, proven by the dominance of non-ICE vehicles at this year’s Commercial Vehicle Show. The current penetration of electric vehicles is 1 in 38 vans registered in 2021 being fully electric (1 in 12 cars). This will increase as the supply chain improves. The proposed Clean Air Zones planned for some of the UK’s major cities will accelerate the move towards electric, but challenges still remain around the infrastructure to support the movement to this cleaner energy source.

Scott Barnett LCV MarketScott Barnett, Sales Manager – Commercial Vehicles

Manager of a nationwide sales team providing bespoke vendor finance solutions to the commercial vehicle sector, Scott has over 17 years’ experience in the finance industry.

If you’re interested in finding out more about how we can support you with your Commercial Vehicle finance, please get in touch with Scott on +44 (0)7557 845 344 or email scott.barnett@uk.bnpparibas.com

enquiryWe are committed to your business growth.

Our competitive finance solutions can help you capitalise on new opportunities. Contact us today to discuss your needs with a member of our team.

  • The British Chambers of Commerce forecasted a strong growth in both gross domestic product (GDP) and business investment from the second half of 2021 throughout 2022.
  • The Finance and Leasing Association are already reporting record ‘year on year’ increases in the use of asset finance.
  • Leasing and asset finance offers the funding necessary to meet the expected increase in the short-term demand for capital equipment.

Whilst the arrival of ‘Freedom Day’ passed with more confusion than celebration, it is more likely than not that we are on a path towards a business environment that will be more like 2019 than 2020. That’s not to say the path will be clear, or that some aspects of life under lockdown will be retained into the longer term.

There will be both new opportunities and new challenges for those of us involved in selling capital equipment. The British Chambers of Commerce released an economic forecast last month, which indicated strong growth in both gross domestic product (GDP) and business investment from the second half of 2021 throughout 2022. Whilst much of this expected increase in economic activity can be attributed to simply making up the ground lost between March 2020 and July 2021, other factors are worthy of consideration when it comes to ‘business to business’ sales.

Therefore, the expectation is that businesses will be looking to rapidly increase expenditure on capital equipment over the next few years; and the Finance and Leasing Association are already reporting record ‘year on year’ increases in the use of asset finance. In the longer term too, we might see growth in business investment replicating what was achieved in the early 2000’s (5% + per annum), rather than the lack of ‘year on year’ growth experienced between 2015 and 2019. It was widely believed that the pre-pandemic stagnation in business investment was triggered by ‘Brexit uncertainty’ and for better or worse, much of that uncertainty has been removed. A second reason for being more optimistic about longer-term investment is that the supply of relatively cheap labour that discouraged many businesses from investing in new labour-saving technology might be reducing. As we emerge from lockdown, workers in many sectors are in short supply and there is evidence that wages are now starting to increase at a much faster rate than has been the case over recent years. If this trend continues there will come a point when investment in new technology will become an economic necessity.

Whilst we can expect a reasonably helpful sales environment over the next couple of years, some challenges are already emerging and more will follow.

  • The shortage of some components, particularly semi-conductors, has disrupted supply chains and resulted in some product unavailability.
  • Inflation, about which little has been heard in recent years, is causing concern amongst central bankers, with some now talking of the need to start raising interest rates sooner than expected to control the rate of price increases.
  • Further, there is much uncertainty as to how the UK Government will seek to control the debt incurred in supporting the Economy through the Covid-19 crisis. One such measure which has been announced, is the planned increase in the rate of Corporation Tax from April 2023, from 19% to 25%.This will be a factor exercising the minds of many business leaders over coming months; and
  • Other tax rises might follow, as might a reduction in Government spending. Either of which will have some impact on certain industries.

Leasing and asset finance offers the funding necessary to meet the expected increase in the short-term demand for capital equipment, and at a time when stock unavailability is of concern, the quick access to funds is of particular importance. BNP Paribas Leasing Solutions have extended some of their credit lines to further increase the speed at which deals can be concluded.

From the perspective of a business acquiring capital equipment at a time when prices are rising and interest rates might follow, an asset finance agreement can be set-up on terms that apply today with no increase in future payments. Additionally, for any operating or finance lease extending beyond April 2023, tax relief on the rental payments could be at the increased rate of 25%, which will have the effect of reducing the ‘real cost’ of the agreement from that time. It is also worth noting, that the Super-Deduction Allowance is available on hire purchase agreements for qualifying expenditure throughout 2021 and 2022.Those agreements might also benefit from having the interest element attracting tax relief at 25% from April 2023.

The role of leasing and asset finance in facilitating business investment has never been more significant, and BNP Paribas Leasing Solutions remain committed to forming strong mutually beneficial partnerships with suppliers of capital equipment and finance brokers.

Andy MilsomAndy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

enquiryWe are committed to your business growth.

Our competitive finance solutions can help you capitalise on new opportunities. Contact us today to discuss your needs with a member of our team.

For customers with a financial year ending on 31st March, the time to review capital equipment expenditure for 2021 is now.

  • The £1m cap on the Annual Investment Allowance has been extended until January 2022.
  • Businesses paying Corporation Tax can make a tax saving of up to £190k on assets acquired in 2021.
  • The AIA benefit can span both tax years 20/21 and 21/22 – those with a financial year-end in March may benefit from bringing forward capital equipment investment.
  • Hire Purchase Agreements qualify for AIA – businesses can benefit from the tax allowances in their current accounting year but spread the cost of purchase.

One of the rare pieces of good news to have surfaced towards the end of last year was a report by the Office for National Statistics stating that UK productivity, measured by output per hour worked, increased at its fastest (year on year) rate in 15 years for the quarter ended September 2020. One explanation for this has been provided through research conducted by ‘Be The Business’, an industry-led campaign to raise standards and spread best practice. Their suggestion is that driven by necessity, many small and medium sized businesses are accelerating investment in new technology. The good news is that the tax system will continue to support business investment throughout 2021, but to take full advantage some businesses might need to act swiftly.

In November last year, the Chancellor announced that the Annual Investment Allowance (AIA) would be set at £1,000,000 for 2021, this marked a continuation of the allowance that was originally put in place only for 2019 and 2020. The AIA is the amount of money a business is able to spend on the purchase of capital equipment and claim the full tax allowance in the accounting year, in which the acquisition was completed. So, providing all assets bought are used for business purposes only, £1,000,000 of equipment can be purchased in 2021 and qualify for AIA which will provide a tax allowance of £190,000 for any business paying Corporation Tax at 19% for the accounting period, in which the equipment was acquired.

The key, however, to making full use of AIA is to ensure that the allowance is allocated in the most financially advantageous way between accounting years. This means that unless your customer has an accounting year that coincides with the calendar year (January to December), it will often prove beneficial to allocate the £1,000,000 allowance for 2021 between the two accounting years that fall within the calendar year and this is where 31st March becomes a significant date. Many businesses have a financial year that ends on that date; which means if they want to maximise AIA for both their current and next accounting years, they have up to £250,000 of annual investment allowance available between 1 January and 31st March 2021. This might provide a strong reason to bring forward any proposed capital equipment investment to ensure delivery during February and March.

The additional good news is that your customers can buy the equipment they need now and get the full benefits of the annual investment allowance available in February and March, without the need for a large cash outlay. This is possible because equipment subject to hire purchase finance agreements qualify for AIA in exactly the same way, as equipment purchased outright. In other words, your customers can get the tax allowances in their current accounting year but spread the cost of purchase over a number of years.

Disclaimer

BNP Paribas Leasing Solutions is not authorised to provide tax advice. You should consult an accountant in order to understand the tax consequences of any investment decision.

Andy MilsomAndy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

enquiryWe are committed to your business growth.

Our competitive finance solutions can help you capitalise on new opportunities. Contact us today to discuss your needs with a member of our team.

If your customers are self-employed, they might need to take action to reduce this year’s tax bill alongside completing payment for last year.

January is an important month for the self-employed, whether trading in a partnership or on their own. As soon as the Christmas decorations come down, the self-assessment tax return for the year ended 5 April 2020 must be submitted, and perhaps more importantly a payment made for all money owed by 31 January.

  • Due to the impacts of Covid, in 2021, HMRC is open to proposals involving staged payments for self-assessment tax return payments
  • The Annual Investment Allowance has been extended over 2021
  • Capital equipment expenditure can be brought forward as the AIA benefit can span both tax years 20/21 and 21/22.
  • Equipment subject to hire purchase finance agreements qualifies for AIA in exactly the same way as equipment purchased outright
AIA Finance Unlocked webinars

Fortunately this year, because of Covid, HMRC is open to proposals involving staged payments which will come as a big relief to many business owners. Whilst the focus in January is normally to ensure that tax issues are dealt with in respect of the last financial year, small business owners also need to give some thought to measures that might reduce their tax bill for the current financial year.

In November last year the Chancellor announced that the Annual Investment Allowance (AIA) would be set at £1 million for 2021, this marked a continuation of the allowance that was originally only put in place for 2019 and 2020. The AIA is the amount of money a business is able to spend on the purchase of capital equipment and claim the full tax allowance in the tax year in which the acquisition was completed. So, providing all assets bought are used for business purposes only, a piece of equipment costing £50,000 can be purchased in 2021 and qualify for AIA which will provide a ‘first year’ tax allowance of £20,000 for a business owner paying income tax at 40%.

The key, however, to making full use of the annual investment allowance is to allocate it between tax years. By way of example, as a partner or sole-trader the current tax year runs from 6 April 2020 to 5 April 2021, so splitting the calendar year allowance between the two tax years that fall in 2021 is necessary. In summary this means that there might be real benefit in using some of the AIA available for 2021 between 1 January and 5 April to reduce a tax bill for the current financial year, a strong reason to bring forward any proposed capital equipment expenditure to ensure delivery before the start of the new tax year.

The additional good news is that customers can acquire the equipment needed now, with the full benefits of the AIA available in February and March without the need for a large cash outlay. This is possible because equipment subject to hire purchase finance agreements qualify for AIA in exactly the same way as equipment purchased outright. In other words customers get the tax allowances this year but spread the cost of purchase over a number of years.

Disclaimer

BNP Paribas Leasing Solutions is not authorised to provide tax advice. You should consult an accountant in order to understand the tax consequences of any investment decision.

Andy MilsomAndy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

enquiryWe are committed to your business growth.

Our competitive finance solutions can help you capitalise on new opportunities. Contact us today to discuss your needs with a member of our team.

Extension of £1,000,000 Annual Investment Allowance until 31 December 2021 is one of a number of factor that could mean the UK economy bounces back strongly next year.

We end the most challenging year in living memory, with an expectation that after a sluggish start, the economy is likely to recover some of the ground lost this year in 2021.

The question is how strong will that rebound be?

There are good reasons to believe that any growth in Gross Domestic Product (GDP) might be faster and stronger than generally predicted. Covid-19 will remain a constraint on economic activity for the early part of next year, however vaccines will gradually allow life to return to something like normal. During 2020 we appear to have learned how to balance the risk to health with the need for some social interaction and a return to work and the second national lockdown was both shorter and less destructive economically than the first. We can therefore assume that even while restrictions remain in place economic activity will be at a higher level next year than this.

The clues to the strength of any economic recovery lie in understanding that the UK economy is driven to a very large extent by consumers, and whilst business investment and government spending are important, it is the degree to which the general public spend money that will have the largest influence on economic growth. A growing economy, driven by consumer spending, should also lead to increased business investment and enable the Government, if it chooses, to maintain or increase spending though higher borrowing. So everything starts with how much we as individuals spend, and it is with this in mind that we can assess the prospects for 2021.

Employment is a good place to start and although there is bad news on the high street with thousands of Debenhams and Arcadia jobs at risk, other sectors of the economy can recover quickly. Having been starved of traditional leisure pursuits for many months it is not unreasonable to expect a big increase in activity within the hospitality sector as restrictions are lifted and this should lead to rapid job creation.

Government infrastructure spending is also expected to increase throughout 2021, which will create new jobs and other businesses remain well placed to take on new staff as consumer demand increases, particularly if our exit from the EU Single Market and Customs Union on 1st January 2021 is relatively smooth.

Figures recently released by the OECD predict that during the current year the percentage of savings to disposable income within the UK will have increased dramatically from 6.5% in 2019 to 19.4%, a bigger jump than any other major economy. With interest rates at historically low levels it is not unreasonable to expect money currently sitting in bank and building society savings accounts to find its way to shops, restaurants and hotels as soon as consumer confidence and Covid-19 restrictions allow.

Finally, The OECD estimates that the UK economy will have shrunk by 11.2% in 2020, more than any other developed country, which in itself suggests that there is great potential for a rapid recovery, particularly as the same source is predicting global growth of 4.2% in 2021.

Whilst not as big a direct contributor to GDP as consumer spending, business investment could also surprise on the upside in 2021; the Government has announced that the annual investment allowance for businesses acquiring capital equipment will remain at £1,000,000 next year which provides a big incentive to invest.

In addition, and somewhat surprisingly, The Office for National Statistics in their third-quarter GDP release last month estimated that for the first nine months of 2020 gross trading profits in the corporate sector were actually higher than for the same period in 2019, implying that funds are available to invest once confidence returns. The relatively low level of business investment in 2020 also means that that out of necessity many business assets will need replacing.

One way or another we should all be able to look forward to a happier and more prosperous New Year.

Andy MilsomAndy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

enquiryWe are committed to your business growth.

Our competitive finance solutions can help you capitalise on new opportunities. Contact us today to discuss your needs with a member of our team.

During the past thirty years there have been three events that have presented a major challenge to the UK economy and asset finance industry.

To understand more it is worth looking, at each of the events and in particular to examine the impact each had on the availability and cost of asset finance.

Three events that shook the world:

  • 1990s recession
  • 2008 recession
  • 2020 Covid Pandemic

The first event came in the early 1990s and brought the last of the pre-globalisation UK recessions. A short period of very high interest rates followed years in which businesses and consumers had built up huge levels of debt, a toxic combination which saw many home-owners plunged into negative equity and very high levels of business failures. Banks and leasing companies saw a large increase in bad debts, often originating from companies who appeared to be financially strong before suddenly collapsing. Unsurprisingly the result was a very severe reduction in credit appetite and an inability of our industry to help in the early stages of economic recovery.

From the mid-1990s we saw a decade of solid economic growth, reducing interest rates and the leasing industry playing a full part in supporting business expansion, but then in 2008 came the second of the three events, a global financial crisis. Unlike a ‘normal’ recession, this crisis culminated in the banks having insufficient funds to support their consumer and business customers. The availability of credit significantly reduced, and, at least initially, the cost of borrowing increased. Some major leasing companies simply had no funds available and withdrew from the market, so as with the 1990s recession, the industry as a whole was in no position to support businesses as they tried to recover.

We are now living through the third event, a global health pandemic in which significant sectors of the economy have been effectively closed for prolonged periods of time. The UK Government has borrowed billions of pounds to provide some short-term relief for both individuals and businesses, but most economic forecasts suggest that certain sectors and individual businesses might never fully recover. In these circumstances of uncertainty one might expect to see the finance industry take a very cautious approach to credit. It is therefore encouraging to learn from our credit managers that they are adopting a ‘business as usual’ approach.

Demand for leasing has remained strong in most of our markets with a rapid increase in business volumes following relative inactivity during the initial period of lockdown, however for the asset finance industry to contribute fully to any economic recovery, supply of credit has to meet demand. In this respect it is good to report that our credit criteria remains unchanged and where we are seeing financial statements which reflect the difficulties certain businesses have faced during 2020, we are trying, wherever possible, to look beyond the numbers and seek additional information rather than simply decline applications for credit.

As an industry we were not in such a strong position to help businesses weather the storms of 1992 and 2008, but, with the cost of credit remaining low and a positive approach to underwriting, BNP Paribas Leasing Solutions are well placed to contribute fully to economic recovery in 2021 and beyond.

Ways that Leasing Solutions can help economic recovery:

1. Consistent credit criteria

2. Innovative finance solutions

3. Dedicated support from our people

Andy MilsomAndy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

enquiryWe are committed to your business growth.

Our competitive finance solutions can help you capitalise on new opportunities. Contact us today to discuss your needs with a member of our team.