AN OXFORD taxi firm has taken delivery of 12 new cabs in a £400,000-plus deal.

And as part of the growth spurt, Osney Mead-based Royal Cars has recruited 10 new drivers and four office staff.

But rather than borrowing from the firm’s own high street bank, which refused to lend, the money came through a type of funding known as asset finance.

Managing director Niaz Mohammed explained: “We needed to invest but no one has that amount of money lying around.

“We have approached banks several times before and found they are no good for small firms, or someone just starting out in business.”

Royal Cars’ experience is not unusual, as High Street banks are more wary of lending since the recession.

As a result, many firms are turning to alternatives, such as asset finance.

More than 500 brokers provided £13bn of funding to small- and medium-sized firms last year.

And asset finance funded more than a quarter of all investment in machinery, equipment and software in the 12 months to March.

Assets are usually owned by the lender until the contract ends, so there is normally no need for match funding or personal property as security.

James Maskill of Oxford-based brokers UK Asset Solutions helped Royal Cars find finance for the 12 vehicles, using three different asset finance firms. He said: “We deal with 15 other funders in the market and compared to high street banks, they are more competitive on the rate and usually ask for less security.

“Exact rates depend on the deal but it would almost certainly be cheaper than high street banks.”

Four vehicles – Toyota hybrids costing £30-35,000 each – were financed by Investec’s Quantum Funding asset finance division.

The cars will help keep running costs down, with ultra-low fuel consumption and CO2 emissions, particularly in congestion and stop-start traffic.

When stationary, the petrol engine switches off to save fuel.

Investec’s head of intermediary sales Martin Harries said: “We lend into hundreds of different industry sectors and often fund replacement equipment vital to the operation of the actual business itself.”

Assets range from cars and diggers through to office equipment and espresso machines.

Mr Harries added: “We’ll look at all medium, small and large firms.

“If a start-up needs welding equipment costing £5,000, we would fund that.”

With a 600-strong fleet of taxis and a bank of 400 owner-drivers, Royal Cars joined forces with rival 001 Taxis a year ago.

Its fleet must comply with council regulations which prevent a car more than five years old being licensed as a taxi.

Mr Mohammed added: “We needed to improve on the image with newer cars, so customers feel safe and have a comfortable drive.”

Mr Mohammed added: “It ripples through the whole business because we took on more drivers, then more office staff.”