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FINANCE
Print IT Reseller
asks leading finance providers about the financing options available to resellers
and finds out how an improving economy is changing the lending climate
Financing the deal
How has the climate changed?
Jo Harris,
Head of Sales, Vendor
Finance,
Siemens Financial Services
:
“Business sentiment has improved as
the UK economy has gained strength.
Rising business confidence has led to
new investment, which is reflected in the
growth of the asset finance market.
“According to the Finance & Leasing
Association (FLA), in 2014 the asset
finance market exhibited its strongest
annual rate of growth since the onset of
the financial crisis. The positive trend has
continued into 2015. IT equipment finance
was up by 53% year-on-year in the first
quarter, with March showing the highest
monthly total of new business (£3.1 billion)
since September 2008.”
Andy Milsom,
Head of Partner Training
and Development,
BNP Paribas Leasing
Solutions:
“We must start by recognising
that the first port of call for a business
needing debt finance has traditionally been
the bank. Therefore any change in the
way banks operate has a significant effect
on the money available for businesses to
invest.
“There are two changes which are
relevant: firstly the cost of loans and
secondly the availability of funds. In both
cases, the banks, which are now operating
within a very much more regulated
environment, are finding it difficult to
satisfy current market demand.”
Is finance still hard to get?
Jo Harris:
“According to the latest Bank
of England
Trends in Lending
report,
the annual rate of growth in the stock
of lending to SMEs remained negative
in the three months to February –
notwithstanding higher gross lending
to SMEs by all UK monetary financial
institutions (MFIs) in 2014. The more
stringent post-crisis banking regulatory
environment means that credit remains
difficult for businesses, especially for
SMEs.”
Andy Milsom:
“The regulatory
requirement of most significance is that
all new bank loans are matched by higher
capital reserves. This makes lending
expensive and banks much more selective
in deciding to whom they should lend.
A further regulatory instruction is that a
much higher degree of due diligence be
applied to every new loan. This is resulting
in higher costs for the banks and, given
that the same cost applies irrespective of
transaction size, banks are likely to become
reluctant to take on small value loans,
such as those that might be required for
investment in IT assets.
“As the banks slowly withdraw
from some of their traditional activities,
alternatives are starting to appear
(e.g. peer-to-peer lenders) or reassert
themselves (e.g. specialist leasing
companies), so finance remains available
but not necessarily from the traditional
source.”
What advice would you give to
resellers looking to finance deals
for their customers?
Jo Harris:
“It is important that resellers
work closely with a finance partner
that understands the market dynamics,
technology applications and their
development path. Finance providers
specialising in the sector are intimately
acquainted with the pace of technology
development and are therefore better
placed to understand the benefits and
business risk involved with the technology.
They will also be well positioned to predict
and help mitigate the underlying risk of
technology obsolescence through flexible
finance solutions and take an informed and
specialist approach to underwriting.
“Key to success is for resellers to work
closely with their chosen finance provider
and to take time to explore the optimum
way of working together – how best to
serve the reseller’s customers’ needs,
common interests and goals – in order to
develop a mutual strategy that can serve
both parties.”
Andy Milsom:
“Resellers need to be
aware of the regulatory environment
under which finance companies operate. In
particular, a much greater emphasis is now
placed on treating customers fairly, with
the regulators insisting that procedures
are implemented and followed to ensure
compliance. This means that in every case,
both the customer and the deal itself will
come under more scrutiny than would be
required for credit purposes alone.
“It is now more important than ever to
submit proposals where the information
continued...
Andy Milsom,
Head of Partner
Training and
Development,
BNP Paribas
Leasing Solutions
Rising
business
confidence
has led
to new
investment,
which is
reflected in
the growth of
asset finance.
