GE Capital has signed an initial £30m stock financing agreement with Swift group, the UK’s leading caravan maker.

GE Capital will provide a distribution finance facility expected to bring Swift some £30m in dealer stocking funds in 2010, rising to £60m in 2011.

Under the contract Swift will be able to provide its network of dealers with on-site display products until they are sold to the end user.

Nick Page, the commercial director for Swift Group said: "Providing adequate stock funding to our dealer networks is a vital cog in the retail chain, enabling dealers to display and therefore sell more of our products."

The deal frees up capital for Swift

The deal also guarantees payment for delivered caravans and motor-homes. This will free up capital and allow Swift to stick to what it does best; making caravans, motor homes and holiday homes.

The industry leader for recreational vehicles at GE Capital's Distribution Finance business, Maarten Endel outlined what Swift is likely to gain from the deal. “By providing finance to Swift’s dealers, we are able to help dealers sell more caravans and motor homes by reducing customer waiting times, holding more show stock and allowing them to order in advance of busy periods safe in the knowledge that they will have access to finance for that order.”

He continued: “Swift Group is a great company with a stable and successful management team and we are delighted to play a role in the future growth of their business as they build on their recent success. Access to working capital is essential to manufacturers as we exit a recession and we are very pleased to be able to support Swift as the company returns to strong growth.”

Understanding the asset values

GE Capital works with over 50,000 SMEs in the UK. Swift, a privately owned mid-market operation, is the type of company that GE Capital tends to work with. Endel said: “We work with a large number of UK manufacturers such as Triumph, Jaguar Land Rover and Sunseeker to provide similar “distribution finance” arrangements.”

He also said that GE Capital understands production processes and asset values in a way that banks can’t. “It’s not just about the finance but also about accessing our expertise in processes,” he said.

Swift has an existing $200m funding arrangement with GE Capital which has brought about to production of more than 10,000 caravans, motor homes and static homes over three years.

Rise in demand for leisure goods like caravans

Meanwhile GE Capital's big ticket leisure index shows that consumer demand for discretionary leisure goods like caravans and motor-homes went up by 22.3% in June compared with last year.

A GE spokesman said the index could prove a useful barometer of consumer confidence as it tracks leisure spending exclusively, which requires a degree of optimism about future disposable income.

Among the $4bn (£2.5bn) worth items tracked annually by the index are jet skis, collectable motorbikes, sailing boats, yachts, quad bikes and motor-homes.