SMEs are turning to vendor finance as the banks are still failing to lend

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The Independent Online

Businesses have continued to increase the amount of money they lend to their customers to help them complete sales, according to Syscap.

The IT finance firm said companies are offering their customers higher levels of vendor finance to make up for the shortage of bank lending to businesses, especially SMEs.

Data from the Finance & Leasing Association shows that the amount of money provided for vendor finance jumped 19 per cent in the six months to the end of July to £2.6bn, up from £2.1bn in the same period last year. Meanwhile business finance provided through asset finance increased by a more modest 2.6 per cent to £10.4bn, up from £10.2bn.

Philip White, CEO of Syscap, said: "More businesses are turning to vendor finance as a way of completing a sale that wouldn't otherwise happen. If businesses can't get the funding to keep up capital investment then the UK economy will lose more and more business to overseas competitors."

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