By Lea Pachta

The Coalition Government’s plans to introduce a major new loan guarantee scheme to small and medium enterprises (SMEs) must include leasing, argues Syscap, a leading independent finance provider.

The previous Government’s flagship Enterprise Finance Guarantee (EFG) scheme excluded leasing from the forms of finance it was prepared to guarantee, and Syscap believes this neglect of the leasing sector by the previous Government has partly contributed to the drop in business investment.

Philip White, Chief Executive of Syscap comments: “Because the vast majority of SMEs choose to fund capital investment through leasing, the previous Government’s decision to exclude leasing from a loan guarantee scheme was a mistake. It is something the new coalition should quickly rectify.”

New figures released by the Finance and Leasing Association (FLA) reveal that the amount of business finance made available to British businesses was £4.1bn in Q1 2010, down 25% on Q1 2009.

Philip White adds: “For SMEs without huge capital reserves lease finance is the most attractive funding option available, so if we are going to see an upgrade to the EFG scheme then surely leasing should be included?”

Rumoured plans to scrap capital allowances need clarification

Syscap also believes that the coalition Government needs to clarify whether or not they plan to pare back capital allowances. Philip White explains that reducing them could jeopardise the ability of businesses to secure much needed capital investment.

Comments Philip White: “The lack of real detail in the coalition document on capital allowances is cause for concern for UK businesses.”

“We are not out of the economic woods yet, and whilst we are told that manufacturing industries will be protected, many worry that when Governments start talking about ‘simplifying’ taxes, someone is going to lose out.”

“Reducing capital allowances to fund a cut in corporation tax could amount to robbing Peter to pay Paul.”

“The removal of capital allowances will disincentivise people from investing in business assets. This investment is vital for the economic recovery.”

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