Mind the Gap!

Posted on October 10, 2015 | , , ,

As any traveller on the underground will recognise, this phrase is heard quite often on the Tube. If you read most of the papers, and listen to the news, you will still think that we are heading on the upward path to continued growth, and 2016 will be a cracking year!

Rose coloured glasses were all the rage in the sixties, but they appear to be still worn in 2015! I think that we will still continue to grow, but perhaps not as fast as some of the media.

There appears to me to be a gap from the real world, and perhaps one which the media inhabits. I don’t know whether it is me showing my age, or if I am right, although I strongly suspect the latter! Funding has changed greatly over the last seven to eight years, with the growth of peer to peer lenders, funding platforms etc, although I understand that not all in the P2P garden is as rosy as it seems.
Latest figures show that 25% of SME’s do not use finance at all, 14% use friends or family whilst 23% use normal bank overdrafts. I understand that up to 500,000 of small firms have their loan requests turned down every year. If my maths are correct, that leaves 38% who are using finance, leasing or HP or other funding sources. Yet this Autumn, if you speak to leasing companies, leasing brokers, and banks, they will tell you that the number of proposals are down by quite a large number. General enquires are also falling.

So what is exactly going on?

I would suggest that possibly that one thing that will stall growth is uncertainty. Companies will postpone investment if they consider that the future is not as certain as they would wish. Europe is still mired with very little growth. In France, the last quarter showed zero growth, Germany are hoping for 1.4% growth that was before VW dropped their clanger. China’s growth is falling, and even the USA this week announced that growth had fallen to 1.5%. Those four countries are our top customers for our exports, so it is not surprising that there is some uncertainty. If you couple this with the in/out EU referendum, you would simply say, let’s wait and see how everything plays out before we invest.

If you cut through the spin and gloss, next year looks not quite as rosy as we are led to believe. Robert Peston in his blog this week said “it does mean the ride into 2016 may get slower and bumpier”
We all know that the myth of standing still does not exist, you are either moving forwards or backwards. To move forwards, you have to ensure that you have the capacity to seize opportunities for growth, and that will mean some way you have to invest. You may be able to fund the investment out of cash flow, or savings, or a bank loan.

However the main funding source that is available is finance, either leasing or HP.  Whilst many  banks have onerous financial underwriting, going to see the bank manager is akin to waiting outside the headmaster’s study, with a feeling of trepidation. Using leasing companies however is a more informal process, and many of us will be able to give you the options of a variety of funders.

If you are looking for a straight talking leasing partner, either as a customer or as a supplier, we can help you both in the UK as well as Europe. We don’t have spectacles of any colours, we are just the same as you, real people in the real world.  Come and speak to us, they always say that the proof is in the pudding!