Leasing to European SMEs
Tanguy van de Werve
Leaseurope Director General
ALB
| November 2012
Global Equipment Leasing Markets in 2011
Canada
CFLA
16%
Japan
27 bil€
11%
Leaseurope
JLA
232 bil€
41 bil€
US
ELFA
13%
China
154 bil€
CLBA
Brazil
-28%
1%
ABEL
7 bil€
New equipment leasing volumes. ELFA figures do not include passenger car leasing
Source: Leaseurope 2011 Annual Survey, local leasing associations, Leaseurope estimates
106 bil€
100%
Australia
16%
AELA & AFLA
16 bil€
2
European Leasing Market in 2011
Evolution of new business by country
New business, annual % change (2011/2010)
30% and higher
20% to 30%
10% to 20%
0% to 10%
-10% to 0%
- 20% to -10%
- 20% and lower
NA
Non - members
Source: Leaseurope 2011 Annual Survey
Annual growth rates based on a homogenous sample of members reporting in Leaseurope’s
2011 Annual Statistical Enquiry and are adjusted for exchange rate fluctuations
3
European Leasing Market in 2011
Regional performance by movable asset category
New business growth - annual % change (2011/2010)
DE
UK
FR
IT*
MED.
80%
Benelux,
AT,CH
CEE
Nordic,
Baltic
64%
60%
33%
40%
20%
18%
13%
15% 15%
10%
8%
12%
26%
15% 14%
16%
4%
5%
3%
18%
16%13%
18%
4%
0%
-6%
-20%
-2%
-10%
-25%
-40%
-12%
-13%
-30%
-24%
-36%
-29%
-40%
-60%
Machines & Equip
ICT
Vehicles
Growth rates are calculated based on a homogenous sample of members reporting & are adjusted
for exchange rate fluctuations
Source: Leaseurope 2011 Annual Survey
* The category “Other” for IT includes some renewable energy assets
Big/Other
4
European Leasing Market in 2012
H1 2012/11 %
-1.0%
H1 2012
New volumes*
119 bil€
30% and higher
20 % to 30%
10% to 20%
0% to 10%
-10% to 0%
-20% to -10%
-20% and lower
NA
Source: Leaseurope Member Associations
*28 member associations reporting; growth rates adjusted for exchange rate fluctuations
5
The use of leasing amongst
European SMEs
With the support of
A report prepared for
Research on leasing to SMEs
Rationale for the research
• Lack of data at European level on SME’s use of leasing:
-
European Central Bank Finance Survey – covers SMEs but doesn’t focus on
leasing on its own, and only covers Eurozone countries
-
European Commission’s Flash Barometer – right scope but out-of-date (pre-crisis)
-
Leaseurope Annual Statistical Enquiry – detailed information on European leasing
market, however no split by firm size
-
National data sources – few; not directly comparable
•
This research establishes evidence at European level on the importance of
leasing to SMEs as a source of financing their investment
•
Based on a unique survey of ~3 000 firms by telephone in 8 countries (DE, FR,
UK, IT, ES, NL, PL and SE), across 9 sectors
•
•
The survey was carried out in July 2011
Leasing defined in the broadest sense: right to use an asset for a period of time
Leaseurope©
What does the report tell us?
• How important leasing is to European SMEs
- How many SMEs use leasing?
- How intensively do they use leasing to finance
investment?
- What is the size of the SME leasing market?
• What assets do SMEs lease and through
which channels?
• Why do SMEs lease (or not lease more)?
• About the role leasing play in driving SME
investment and growth
- Lessees invest more
- Leasing enables SMEs to expand
- Economic impact of more SME leasing
Details on how to obtain your copy can be found on the SME
Leaseurope©
report page of www.leaseurope.org
European SME investment through leasing
6 million SMEs used
leasing in the
8 countries sampled
2010
€100 billion of
SME investment
in fixed assets was
financed through
leasing
This represents 52%
of the business
leasing market
in Europe &
45% of the total
leasing market
In comparison…
• the European Investment Bank provided €10 bn in direct SME loans through banks
 63,000 SMEs supported
• SME Guarantee Facility of the European Investment Fund (EIF) supported €1.2 bn
in direct loans to SMEs
 20,000 SMEs supported
• EIF invested €930 mil in 42 equity and mezzanine funds as SME support
• Venture and enterprise capital helped finance 16,700 SMEs in Europe between 2007
and 2010, totalling €46.5 bn according to the European Venture Capital Association
Leaseurope©
How many European SMEs use leasing?
•
40% of all SME firms used leasing in 2010 – more than any other individual
form of external financing, and we expect more of them will in 2011 (43%)
- This equates to an estimated 6 million
individual SMEs who rely on leasing in the 8
countries in our sample
- More SMEs use leasing than bank loans of
> 3 years
- Use of leasing increases with SME size
- Micros generally make less use of all forms
of external finance
Investment by funding type - all SMEs
Percent of firms using finance type in 2010
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
40%
s
rs
e
P
al
on
e
R
s
ng
i
n
ar
nd
fu
ed
in
ta
e
i
as
e
L
t
s
ng
an
Lo
>3
f
ra
d
r
yr
nk
Ba
e
ov
t
di
re
Tr
e
ad
C
an
o
L
s
<3
yr
e
at
ir v
ty
ui
q
e
in
or
g
t
c
Fa
P
Source : Oxford Economics/EFG
Leaseurope©
Leasing as a share of SME investment
•
At EU level, leasing was responsible for financing just over €100 billion of SME investment
in fixed assets in 2010 (€112.5 billion expected in 2011)
•
The share of SME investment financed by leasing is set to increase from 16.7% in 2010 to
18.6% in 2011. By contrast the share of all forms of bank lending taken together (loans,
overdrafts, etc.) was 31% in 2010 and is expected to decrease in 2011
Investment finance in 2010 and 2011 - all SMEs
Proportion of investment financed by:
Cash /Equity
Leasing
Bank loans
Other debt
100%
90%
80%
15.5%
13.8%
16.7%
18.6%
70%
Loans of > 3 years
60%
50%
31.2%
28.3%
40%
Short term credit
(incl. overdrafts,
30%
20%
Loans of < 3 years
36.7%
39.4%
2010
2011
credit cards)
10%
0%
Source : Oxford Economics/EFG
Leaseurope©
Through which channels do SMEs access leasing?
•
The most important channel for accessing leasing is the vendor or point of sale
channel – providing clients with a one stop shop for assets and financing solutions:
- 67% of lessees used the vendor channel in 2010
- 58% accessed leasing through a banking channel
- 36% accessed directly from the lessor
Proportion of lessees using each channel by firm size,
2010
Vendor
Lessor
80%
Bank
Brokers
70%
60%
50%
40%
30%
20%
10%
0%
Micro
Small
Source : Oxford Economics/EFG
Medium
SME Average
Leaseurope©
Leasing enables firms to expand faster
•
Leasing is one of the funding sources that new firms are able to turn to most
quickly
- The use of leasing increases from 26% for SMEs less than 2 years old to 50% for SMEs
aged between 2 and 5 years
- The take-up of bank loans (> 3 years) increases from 29% to 38% for these age groups
Non-equity financing
Equity Funding
80%
80%
70%
70%
60%
50%
Retained earnings
60%
Private equity
50%
40%
40%
30%
30%
20%
20%
10%
10%
0%
< 2 years
Source: EFG
ST bank credit
Trade Credit
Leasing
Loan >3 yrs
Loan <3 yrs
Personal funds
Factoring
Firms using financing type by age
Firms using funding type by age
0%
2-5 years
5-10 years
>10 years
< 2 years
2-5 years
5-10 years
>10 years
Source : Oxford Economics/EFG
Leaseurope©
Lessees invest more
•
On average, lessees invest 53% more than non-users of leasing. This trend also
holds across sectors (except agriculture) and countries.
- Difference between lessees & non-users especially pronounced amongst small firms -
small firms who leased in 2010 reported investing an average of €302 000, i.e. over
€100 000 more than non-users.
- Small lessees in particular may invest more than non-users because they are taking
advantage of one of the few external financing options available to firms of that size.
SME investment by lessees and non-users
EU investment spending by enterprise size
€m
€ thousands, 2010
1.6
1000
1.4
900
Lessees
800
Non-users
700
Lessees
0.8
600
Non-users
0.6
500
0.4
400
1.2
1
300
0.2
200
Source : Oxford Economics/EFG
100
All firms
Medium
Small
0
Micro
Professional
Services
Transport and
Storage
Distribution
Agriculture
Hotels and
Restaurants
Average
Construction
Real Estate
Manufacturing
Mining and
Utilities
0
Source : Oxford Economics/EFG
Leaseurope©
Why do firms lease?
•
Leasing is attractive to SMEs in many different circumstances and can meet the
needs of diverse businesses
Reasons to use leasing:
1=very important
1. Better price than other forms of finance
2. Tax benefits
0.7
3. Ability to finance up to 100% of the purchase price of an asset,
without having to provide any supplementary guarantees or collateral
4. Enables better cash flow management
Rank
5. Ability to adapt the length of the contract according to your company’s
needs
6. Accounting benefits
7. Predictability and transparency of rental payments
8. Ability to use assets without bearing the risks of ownership e.g. risks
on second hand asset values or the disposal of the asset
0.6
9. Ability to upgrade and renew assets more frequently than purchasing
would allow
10.Ability to bundle finance with optional services e.g. installation,
insurance, maintenance repair of the leased asset
11.It is easier / faster to obtain leasing than other forms of finance
0=not at all important
Leaseurope©
Macro-economic contribution of increased leasing PR
Macro-economic contribution:
 Baseline – Oxford Economics forecasts for GDP
growth from 2010 onwards, assuming PR kept
Potential output under leasing scenarios in 2020
€trn, 2010 prices, total for FR, DE, IT, NL, PL, ES, SE and UK
at 2010 rates.
 Scenario 1 – Impact of firms leasing at 2011 PR Potential output under leasing scenarios
+1.5%
on levelPoland,
of GDP
€trn, 2010 prices, total for France, Germany, Italy,
Netherlands,
vs 2010 PR
Spain, Sweden and UK
What would the impact on potential output of a
permanent shift to 2011 PR levels be?
 Scenario 2 – micro firms increase leasing to
small firm PR
Micro firms currently finance 10% of
investment via leasing. What if they increase
this to 16.7% (small firms’ PR), but keep other
investment constant?
 Scenario 3 – “Leasing boom”
Assumes all categories of firm increase PR
from 2011 levels by the same amount as
whole economy PR fell 2008-2010. This is the
most ambitious scenario.
Or
13.10
+ 0.9 to 1.0% on level of GDP
13.05
or
+ €200bn
+ €100bn each
13.00
12.95
12.90
12.85
12.80
12.75
Baseline - 2010
Penetration
rates
Source : Oxford Economics
Scenario 1 2011
penetration
rates
Scenario 2 higher micro
leasing
Scenario 3 leasing boom
Leaseurope©
Leasing to European SMEs
Tanguy van de Werve
Leaseurope Director General
ALB
| November 2012