Some of the country's independent leasing and rental companies could be facing bankruptcy after changes to their funders¹ lending criteria.

Such is the seriousness of the situation that the BVRLA is working with some lenders to secure terms and is also investigating a syndication option.

A creditors¹ report on the recent bankruptcy of 1car1 highlighted issues that, if replicated, could leave other companies vulnerable.

Its practice of borrowing against the full list price of cars was stopped after funders reviewed their lending policy.

Cash flow was further hit when a number of other funders withdrew from vehicle financing.

Fenton Burgin, a partner in corporate finance at Deloitte, said: "It's common practice in the industry and it¹s certainly an area more banks are focusing on.

"There will be a number of finance directors in the industry who will be very concerned about the terms of their existing banking facilities."

All vehicle leasing and rental companies, whether bank-owned or independent, are finding funding more expensive and difficult to get hold of, according to John Lewis, chief executive of the BVRLA.

"We are working with a number of our independent leasing company members to develop alternative sources of funding," he said.

"The association has held some very constructive discussions with Barclays and HSBC and is working on sourcing new finance through syndication."

ACFO said it was crucial fleet operators had a contingency plan.

"This should include communication to drivers, arrangements with regard to existing direct debits, notification to insurance companies and ensuring that copies of all master contracts are available," said chairman Julie Jenner.