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Business Financing

It appears the banks are still very tight when it comes to agreeing business loans. Wether it is a commercial mortgage, asset finance or an overdraft for working capital they are still looking for reasons to decline a deal rather than looking for the reasons to do a deal. Further more they appear to be looking after their own. customers. Many of the high street  banks had separate divisions offering hire purchase, leasing, factoring and invoice discounting. As the credit crunch has dried up the available funds, the market has restricted massively in terms of available funding options. The banks that are lending are lending to their own customers. They need to be blue chip, profitable and have a very good relationship with their existing bankers.  In other words they are cherry picking their deals. In addition the margins they are commanding are far higher than was being offered before the credit crunch.

As an independent finance broker we have seen the available funders reduce on a month by month basis. There are now only a handful of funders available in the market place. If a customer is blue chip most types of capital investments can still be financed via a high street finance company. We call these sorts of transaction balance sheet lending. However if you cannot get funding via the high street, things become slightly more complicated. The second and third tier funders that would traditionally take a commercial view on a business are only doing deals on an asset secure basis. Therefore any new purchases need to be funded by taking additional plant and machinery as security or if that is not available we are increasingly doing deals by taking second charges over property

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