What happens when we unlock the full potential of leasing?

A manufacturer needs safer equipment to protect its employees and boost productivity. A small business looks for better ways to process payments but doesn’t know where to start. A restauranteur eyes up new premises but is put off by the hefty capital expenditure.

These kinds of stories are all too familiar in the world of SMEs. The opportunities for growth and progression are enormous, but in times of unprecedented economic strain it can be hard to prioritise taking the next step.

That’s where Leasing comes in. As a more flexible form of financing, it simplifies your expenses into more manageable monthly payments, helping businesses get the equipment and tools they need on the budgets they can manage – it’s a win-win.

So it is shocking to find that just 4% of SMEs have actually used Leading as a financing option, according to our research.

Let’s imagine more SMEs knew about Leasing and were using it to help their growth. What would this mean for a business like yours? And what would the collective benefit of more widespread adoption of Leasing be on the UK?

The economic benefit

The key takeaway from our new report into Leasing for SMEs, ‘Lease for Life’, is that it is sorely underutilised.

In fact, the most popular form of financing for these businesses is through credit cards, with 52% of SMEs using this method. This provides business owners with easy access to a revolving line of credit to make crucial investments, but it is also a more expensive route. With it comes high interest rates, and the risk of overdraft charges and accrued debt.

That’s the key economic benefit of Leasing: instead of shouldering capital expenditure, businesses can spread the cost over simple and regular monthly payments, giving them access to new equipment without the financial burden.

This allows SMEs to focus on their growth and contribute more to the UK economy, which is why the annual value of Gross Value Added (GVA) associated with the use of Leasing is expected to be worth £1.2 billion per annum by 2025.

It will be crucial for businesses to narrow the awareness gap on Leasing to ensure they can make the most of this opportunity.

Getting up to speed with how asset financing can benefit your business will put you on the right track to reaping its benefits. Because with more widespread adoption, the benefits look only set to grow.

Manufacturing in the spotlight

Let’s take the manufacturing sector as an example. These businesses are key proponents of Leasing, with the practice helping them contribute over £300 million GVA.

Manufacturers need high-quality equipment, both to maximise the speed and efficiency of their output, but also to ensure the health and safety of their employees. Leasing affords them a convenient way to access this equipment, which is likely why over a third (36%) of SMEs in the manufacturing sector say they expect to carry on using Leasing to help their business grow.

And it’s not just about economic benefit. Leasing also supports around 8,000 jobs in the manufacturing sector and by 2025 this could almost double as both the sector and use of the financing method grow.

A unique approach for your business

Leasing supports jobs across the entirety of the UK, with our research finding hotspots in Yorkshire and the Humber, London, and the West Midlands.

Just as different sectors face different challenges, regions in the UK pose unique situations for businesses.

For example, almost one in five (19%) of Yorkshire businesses rank supply chain pressures as one of their top challenges, according to BDO. This means there may be more pressure on these businesses to ensure their logistics and warehouse management equipment is up to scratch.

On the other hand, businesses in other areas may face more rigorous health and safety standards or cater to customers who are used to more seamless service experiences. Whatever the challenge, Leasing represents a unique opportunity to support your bottom line and propel your growth.

With businesses adopting Leasing as a more flexible financing method, regions across the UK can unlock more job opportunities and growth. In fact, our research has found that the use of Leasing has the potential to create an additional 18,100 jobs with UK SME industries by 2025.

So how do we get there?

The main challenge in more widespread adoption of Leasing is one of education. Of businesses who opted against using Asset Finance, one in ten did so because they didn’t have access to sufficient information about it.

To overcome this, businesses should lean on their suppliers to find a solution that fits them. With over 40 years’ experience in the industry, at GRENKE we pride ourselves on matching the perfect financial solution to your business.

Because financing should be the least of your troubles. With so many pressures in the market already, rapid advancements in technology and equipment should be a source of excitement, not worry.

Leasing can help you take your business to the next level – and in doing so, boost the wider UK economy.  In fact, we found that SMEs taking up this form of financing could see a potential additional injection to the national economic output (GDP) of £7.6 billion per annum by 2025.

And it can all be as simple as starting a conversation with a trusted expert.

Ready to start your journey? Learn more about how GRENKE can find the right solutions for you by exploring our website today.

And read more about our research into the impact of Leasing on the UK economy here.