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Alternative forms of finance are gaining ground with traditional bank funding in the transport sector, according to the results of the latest Close Brothers Business Barometer.

The quarterly survey, which canvasses the opinion of SME owners and managers from a range of sectors throughout the UK, showed that a fifth of firms in the transport sector are opting to use asset finance as their main form of business funding, whilst 16% are relying on personal finance.

23% of firms polled in the sector said they still use bank overdrafts as their main form of business funding but only 12% depend on bank loans.

Commenting on the findings, Managing Director of the Transport Division at Close Brothers Asset Finance John Fawcett said: “Bank overdrafts continue to be a major source of funding for many in the transport sector but there certainly appears to be a shift in attitudes towards funding with many looking beyond traditional bank lending.

“It’s great to see that so many transport firms are recognising asset finance as a sustainable way to fund their business, and it’s interesting that it has overtaken traditional bank loans as a form of business finance.”

The Business Barometer also revealed that almost a third of firms in the transport industry consider access to finance to be a challenge and as many as a quarter cited obtaining finance and cash flow as their biggest barrier to business growth.

Mr Fawcett added: “With access to finance still one of the main challenges facing the transport industry, we would urge all firms to widen their search and evaluate all the means of funding available to them.

“Asset finance is a flexible form of funding that allows firms to unlock the capital tied up in their existing assets so that it can be used to facilitate their growth and development strategies.”