The transaction is the first of the British Business Bank’s innovative new ENABLE Funding programme, which aims to increase significantly the supply of leasing and asset finance to smaller businesses in the UK. The European Investment Fund will guarantee 50% of the facility.
Gavin Wraith-Carter, General Manager, Hitachi Capital Business Finance said: “Being the first funder to take part in an ENABLE funding programme transaction reinforces our commitment to understanding the specific needs of SMEs and offering tailored financial solutions that fit their business requirements. As a leading provider of business asset finance, we offer SMEs a valuable alternative to mainstream lending, allowing businesses to free up cash flow and to budget appropriately for the equipment they need to remain competitive. This initiative is a fantastic example of how Hitachi Capital looks at new and fresh ways to generate increased use of alternative lending to UK SMEs.”
Reinald de Monchy, Managing Director, Wholesale Solutions at the British Business Bank, said: “This £100 million transaction with Hitachi Capital is the first in our new ENABLE Funding programme, which aims to boost the availability of asset finance. We are planning a number of further transactions over the next 18 months, and to refinance these facilities through securitisation once they achieve the required critical mass.”
Simon Goldie, Head of Asset Finance at the Finance & Leasing Association (FLA): “Leasing and Hire Purchase are great options for firms, especially with the high application-success rate. Using asset finance means business can access working capital and manage their cash flow – and that flexibility can make a real difference to growth plans. We hope today’s announcement will be the first of many to help even more SMEs access the funding they need.
The programme will allow Hitachi Capital UK to expand substantially its provision of business asset finance. Hitachi Capital UK works through finance brokers and vendor organisations to provide a diverse range of products to smaller businesses including hire purchase, operating lease and finance lease solutions.
The programme aggregates asset finance portfolios from these important mid-market providers in a warehousing financing facility.
In order to build the critical mass necessary to securitise the assets, the ENABLE Funding programme will be announcing similar agreements with other funders over the next 18 months. Facilities will range from around £25m to £150m, and the programme will aim to refinance the warehouse facilities when receivables total approximately £300m.
This refinancing, the first such transaction of its type in the UK, will allow institutional investors access to a large and highly diversified pool of SME debt, and is intended to help kick-start asset finance securitisation more widely.
