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What alternative SME finance service continues to grow?

The jury is still out over the Funding for Lending scheme with it receiving, as yet, only a lukewarm reception from the SME sector. However, the alternative SME finance sector goes from strength to strength, with the asset finance market posting solid growth for the second quarter of the year.
While various government initiatives to bolster bank small business lending have failed to achieve the necessary stimulus over the last 18 months, the likes of invoice finance and asset finance have become popular SME credit facilities. And this trend looks set to continue: while the Funding for Lending scheme has yet to make a notable impression on SME lending levels, the Finance & Leasing Association has reported a 9% growth in the asset finance market for Q2 2012.
According to the association, growth was driven by a 48% rise in IT equipment finance, while plant and machinery and car and commercial vehicle finance also showed a healthy increase. Notably, more and more SME finance agreements were made through commercial finance brokers over the three-month period.
Consider these figures alongside those showing a 7% increase in the use of invoice finance by small businesses in the UK and Ireland in 2011, from the Asset Based Finance Association, and it is clear how the traditional SME finance landscape is shifting. The more growth recorded by alternative SME lending facilities, the more surprising the government’s decision to keep third-party SME finance packages outside of its lending schemes.
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