Small businesses are increasingly borrowing against purchases as they find it more difficult to get unsecured loans from banks, with asset-based finance loans rising above £25bn last year.
Secure Trust, the 51-year-old Birmingham-based lender majority owned by Arbuthnot Banking Group, has agreed a partnership with finance company Haydock to provide asset-based loans.
The move seals a major push into commercial finance from Secure Trust, which last year raised £50m to fund the creation of an SME lending division.
Despite Britain’s economic recovery of the past two years, net lending to business among the biggest banks continues to fall, threatening to lead to a shortfall in investment and an unbalanced recovery.
Asset finance allows small businesses to borrow money secured on purchases such as equipment or vehicles, so that they do not have to sink a large amount of cash into such investments.
According to the asset-based finance administration, use of such borrowing increased 14 per cent last year to £25.4bn.
Secure Trust has made loans of more than £600m, having increased new loans by 75 per cent last year, and has a number of well-heeled investors including Steve Cohen, the American billionaire. The company is one of a number of “challengers” like Metro Bank and Aldermore who are aiming to take business away from the UK’s big four lenders.
Paul Marston, the bank’s head of business and commercial lending, said: “Our Business and Commercial division is now able to offer SMEs a full suite of solutions to achieve the funding their business needs to grow.”
