We are now finally starting to see some action from certain banks in providing efgfunding. EFG Funding or the Enterprise Finance Guarantee Scheme replaces the old Small Firms Loan Guarantee Scheme. The new scheme is supposed to be more flexible than the old and enables banks to lend money to busines users where there is a lack of tangible security. however it doesnt make a bad deal good and the banks will only advance if the deal ticks all the right boxes. To date only two banks are responsible for 90% of the lending. XL Business Finance can provide a free asessment of your eligibility for a loan under the scheme.

Running a busines is a challenge at the best of times and keeping cash flowing and paying suppliers and staff is a constant juggling act. This has never been more relevant than in the current economic climate where raw materials , energy and fuel costs and a squeeze on credit are putting pressure on business owners.

XL Business Finance has access to a number of funders who can provide you with flexible funding solutions that can release cash tied up in your company and releive some of the pressure you face every day in business.

refinancing existing machinery

invoice discounting

factoring

payroll finance

Non Recourse Factoring provides a certain amount of bad debt protection. In addition to providing cash up 85% of the customers unpaid invoices, bad debt protection is provided against unpaid invoices. However there are two very different schemes run by bank owned factoring and independent factoring companies. Banks can provided blanket cover with their bank owned innsurance scheme. Independents provide insurance offered by 3rd party companies. This is usually provided at a cheaper rate than the customer would get if they went direct to the insurance company themselves. Both schemes have their pros and cons.

The Enterprise Finance Guarante (EFG) replaced the Small Firms Loan Guarantee Scheme (SFLG)  in January 2009. The new scheme makes loans available up to £1.0m and in theory is more flexible than the old scheme. A 30% contribution is required from the customer and the loan is suitable for businesses which have been declined due to lack of security, previously been ineligble for SFLG or have been unable to get finace via other types of products.

At .85% per month Payroll Finance isn’t the cheapest form of funding however when you consider that there are no personal guarantees required and that the payroll funder is classed as a trade creditor it is proving a viable alternative to a bank overdraft. There is no guarantee that banks are even willing to grant overdrafts and they more often than not require additional and onerous security.  Payroll finance provides up to two months of the gross monthly payroll on a revolving credit facility. It can sit alongside traditional cash flow facilities such as factoring or invoice discounting. Surely less reliance on the bank has got to be a good thing in these difficult times!

It appears businesses are increasinlg looking for additional means of funding working capital other than the their bank overdraft. Stocking finance is a viable addition to taditional cash flow finance facilities. Stocking finance is usually provided in conjunction with a factoring or invoice discounting facility. Not all factoring or invoice discounting companies povide a true stocking facility. All say they do but most only provide funds against stock to provide an over advance of equal to and no more than the total debtor book. Furthermore they wil reduce the advance over an agreed period back to the agreed payment of the debtor book. IE 85-90%. There are only a handful of true revolving stock facilities where an agreeed percentage of the stock is permanently advanced on a revolving credit basis. Remember this facility must be used in conjunction with the factoring or invoice discounting facility.

It may be worth mentioning it is possible to write larger hire purchase and leasing deals in Euros. In view of the very weak pound a business may be better off drawing the funds in Euros and paying the finance company in Euros. This will only work if its operates a euro account which will therefore eradicate any exchange rate fluctuations. Obviously any business equipment finance facility is subject to credit approval!

Looks as though XL Business Finance will be hitting the ground running in the new year. We are handling an unprecedented number of enquiries for businesses  refinancing existing machinery. Deals vary from a small bakery wishing to reduce its £15k OD with the bank right through to a 10m turnover engineering company wishing to raise £250k  working capital for new contracts in 2009. No matter how big or small your equipment, so long as it has some value it may be possible to release some equity. Have a great 2009!

Obtaining finance for new start businesses can be tricky at the best of times. High street banks and finance companies have virtually shut up shop. And at the best of times they would require costly projections and business plans, get the customer to jump through hoops and probably say no. Thankfully there are still a handful of lesser known smaller companies willing to look at asset finance leasing for new start businesses. Providing the proprietors are home owners with a bit of equity and have a relatively clear personal credit profile it may be possible to obtain finance up to a certain level without too much of a problem. Admittedly personal guarantees will be required and the rate will be higher than a high street bank but might enable the business to borrow in a tax efficient manner and obtain the funding for the much needed piece of kit.