The Finance and Leasing Association (FLA) has called for the Pre-Budget Report to include tax incentives to help businesses to invest in leasing new equipment, including company cars and vans.

In the 12 months to September lending to small businesses to buy new cars and vans fell by 28%.

Asset finance providers report that businesses, especially hundreds of thousands of small businesses, are still delaying investment in essential business equipment.

The latest FLA statistics from show that asset finance provided to UK businesses fell by 33% in the third quarter of 2009 compared with the same period a year ago.

The trend is for businesses to delay investment in the recession.

Many small businesses do not have the capital to replace ageing vehicles and are instead making current vehicles last longer.

The FLA is calling on the Government to support the efforts of leasing companies to help small business by providing tax help to businesses leasing equipment equivalent to the help already available when paying up-front.

Julian Rose, head of asset finance at the FLA, said: “the chancellor’s statement needs to finally recognise the need to help small businesses to invest in efficient, reliable equipment.”