Leasing specialist Syscap has stressed the importance of vendor finance in keeping UK channel sales ticking over as financing use rose by almost a fifth in 2010's first half.
Figures from the Finance & Leasing Association found that, for the six months to the end of July, money provided for vendor financing tools stood at £2.6bn. This represents a 19 per cent hike from the £2.1bn figure reached in the same period last year.
Overall financing through asset finance schemes rose just 2.6 per cent to £10.4bn in the half-year to the end of July.
Philip White, Syscap chief executive, claimed vendor financing can be instrumental in ensuring UK plc does not lose business to overseas competitors.
"Businesses are nervous about the economy so they do not want to buy business assets with their cash. SMEs do not want to borrow more from their bank and banks do not want to lend," he said. "Vendor finance helps deal with all those problems.
"If businesses cannot get the funding to keep up capital investment, then the UK economy will lose more and more business to overseas competitors – so vendor finance is playing a really important role. For the UK's manufacturing sector this sales finance can be a vital tool."
If the government cannot get banks to lend to SMBs, added White, it should examine how it can assist independent finance providers in lending to smaller businesses, including through vendor financing.
"The government ought to see what it can do to encourage these other increasingly popular, alternative finance tools," he said.
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