It is possible to refinance already owned plant and machinery to release cash for just about any purpose. There are only a few finance companies capable of doing such financial transactions and most of them are independently owned. It is very unusual for a high street finance company to do such transactions. They simply don’t have the expertise to carry out such transactions. It is not as simple as raising an invoice from the company to the finance company. there is faf more to it than that. XL business Finance has been trading for over ten years and is one one of the uk’s leading asset finance broker. We genuinely believe that if we cannot sort the finance than it cannot be done. To find out how refinancing existing plant and machinery can benefit your business then read on.

Most asset lenders provide funding on a similar costing which incidentally is considerably higher than any bank funding. This is because the asset based lenders will borrow money from the banks at a normal commercial rate put on a margin and lend it to businesses wishing to release some cash. These asset lenders your their experience and expertise to lend businesses money which the banks are not prepared lend. These specialist lenders know exactly how to value equipment. They will obtain valuations from professional valuers, trade dealers and use their previous experiences in particular equipment. Based on this info they will lend a percentage as what they think is the trade value. The documentation is a little more complex than a straight forward hire purchase or finance lease transaction. These finance companies also know their exit route. If a piece of kit comes back from  a distressed business they know how to dispose of the kit quickly and at the best possible price. This will also protect the directors whom may have provided personal guarantees

XL Business Finance has been helping printing companies raise cash against unencumbered  printing equipment or equipment which is coming to the end of its finance. The ability to raise cash is providing a life line for many cash strapped businesses especially as the banks are still being very selective in whom they will advance money.  In fact any industry sector which has large and expensive items of capital equipment, such as printing, is in a fortunate position.

Cash can be raised just for about any purpose, however if your business is struggling you may expect to pay higher interest rates than if your business is trading well.  Many asset based lenders will only advance money if your business has had difficulties however the finance company will probably need to make a few checks to verify the future viability of the business.  You may also find that the loan to value may be reduced as you will  be considered a higher risk.  Business that are trading well may command a more favourable rate however don’t expect bank rates. Refinancing capital equipment is s very specialist market and as a rule of thumb high street banks and finance companies  wont refinance equipment.  More profitable  businesses might want to refinance equipment to provide a deposit for another project .  We are seeing more and more businesses wishing to refinance to reduce their exposure with the banks or where they have been refused finance from the banks because of their outstanding exposure.

It may even be possible to use cash from refinancing in conjunction with factoring or invoice discounting to provude  a new funding package.

More and more businesses are looking to refinance existing equipment, plant and machinery to assist we cash flow. XL Business Finance has been helping customers for 10 years and is one of the UK leading independent finance companies in this area.  Not only can refinancing equipment provide cash for any purpose  and provide financial freedom,  it is quite possible to refinance plant and machinery already on finance and provide a massive cash flow benefit by having a lower monthly payment.

The first thing we have to do is obtain a valuation for your existing machinery. Any heavy goods such as engineering equipment, printing equipment yellow, goods commercial vehicles, buses and coaches are all suitable security. We will age make  model and any details of any  extras which might positively enhance the valuation. We will then obtain valuations for various different sources.  As this doesn’t cost anything we will only have indicative valuations only. XL Business Finance has the expertise and knowledge in various sectors to know which finance companies and valuers will provide the best valuations in various sectors

If the valuation stacks up we will obtain accounting information and bank statements to obtain a funding facility. If equipment is already on finance if we can obtain copies of the finance agreements and we will be able to calculate approx settlement figures and if there is any equity in any of the equipment. It is possible to refinance the equipment by ay of a sale and lease back, sale and hire purchase back and a loan and chattel mortgage. Which facility is best for you depends upon the written down value in your accounts and your preferred finance method.

The ability to release cash from the equity in existing plant and machinery is providing a life line for many UK based businesses. Cash can be released for just about any purpose and so long as there is some value in your equipment a deal can be done for just about any type of company irrelevant of its trading performance.

It is even possible to release cash even if your existing finance agreements have not reached the end of their term. Providing you have a copy of your finance agreement XL Business Finance will be able to do a rough calculation of your settlement figure. If you can also provide a list of your equipment we can obtain a rough valuation for refinancing purposes. As a minimum we will need age , make and model of the equipment you wish to refinance. There re a number of potential finance companies that are able to refinance existing plant and machinery and all use slightly different methods to value the kit for refinancing purposes. Remember that this is a very specialist market asset refinnace  and that any valuations are obtained on a worse case basis or forced sale basis. XL Business Finance has the expertise to approach the finance that will provide the best valuation for your particular equipment. One finance company may be strong in the construction market for example whereas other finance companies might be good at printing equipment. We guarantee we get you speaking to the most appropriate funder for the type of equipment to be refinanced and for your particular circumstances.

A prepack other wise known as a phoenix is whereby a business goes into administration with the intention of the directors purchasing  the assets ofthe business in a newly formed limited company.   Not all finance companies will fund prepacks so it is important that all ones ducks are in line before a business pushes the button.

It is important to have the right factoring or invoice discounting company in place. As banks more often than not will not finance prepacks  it may be advisable to replace the bank owned finance company with a friendlier  and more accommodating finance company. This may only work when there are no other bank borrowings. If an overdraft is in place consideration must be taken into account if notice is given to quit a factring facility as undoubtedly the bank will call in the overdraft facility.

If there are no other facilities complicating proceedings the new factoring company will replace the inflexible factoring company. AS they wll be the main debentyre holder they can appoint the administrator of your choice, fund the new co and collect in full the debtors of the old co. Seamless!

Perhaps not. Any hire purchase and finance lease deals must be taken into condsideration. It may be possible to rewrite any hire purchase or finance lease deals into the new co however not all finance companies will novate the agreements into the new. XL Business Finance has experince of helping customers replace such finance agreemnts.

A prepack is otherwise known as a phoenix. A business goes into administration and the directors purchase the assets off the administrator in a prearranged agreement. Not all finance companies will finance a prepack so it is important to get the best possible advice and have all the new finance facilities in place. A good corporate insolvency firm will provide experience and guidance as to the best way forward however when it comes to arranging the new finance facilities XL Business Finance can provide some help and experience of our own.

Depending on the factoring or invoice discounting company  it may be advisable to replace the existing factoring company with a more flexible funder. As it is the factoring company that more often than not appoint the administrator it is important that the factoring company appoints the administrator which will assist with the prepack. A bank appointed administrator may lead to events not going the correct way. It is also important to take into consideration any  other bank facilities which may be called in if a customer tries to change factoring companies. This will have an affect on personal guarantees. We have seen instances where procedure were carried out against the advice of the administrator, notice was given to the existing bank owned factoring company and the bank called in a substantial overdraft . As you can imagine things got a bit messy.

XL Business Finance is one of the leading specialists in refinancing plant machinery and existing equipment. Refinancing existing equipment is completely different from traditional equipment finance and here are a few tips to explain and make the process a lot easier.

1. Identify why there is a need to raise additional cash

2. Provide a list of equipment and machinery to be refinanced. The age , manufacturer, model will be required as a minimum. Provide any other information which may help to increase the refinance value such as any extras, original cost, condition and usage.

3. If the equipment is the equipment subject to any finance agreements settlement figures will be required.

4. Are the existing finance agreements hire purchase or finance lease as it will make a difference to the settlement procedure and  VAT treatment?

5. Are there any debenture holders? If a business has a bank overdraft or uses factoring or invoice discounting they will have a charge over the book debts and a floating charge over the assets. A debenture waiver will be required to release the assets and it is important to that the relevant funder is approached early in the decision making process.

6. Is there a Landlord? If there is a landlords waiver will be required before the equipment is refinanced. A landlords waiver will prevent the landlord from distraining against the equipment in the event of non payment of rent. It will also give the finance company a period of time to sell the equipment. A landlords waiver is usually  90 or 180 days and the longer the period the bigger the valuation.

7. WE will obtain a desk valuation. This gives us an indication of the value of all the equipment to be refinanced. XL business finance will use our expertise to get  the best possible valuation. Depending on the type of equipment we will obtain different valuations from professional valuers, dealers and various finance companies.

8. Personal guarantees. These are not always essential although it will help obtain a higher loan to value. Sometimes a limited personal guarantee can be taken

9. Directors warranty. A warranty confirms the goods are free from encumbrance  and ensures the goods are returned to finance company in the event of any default situation

10. Collating paperwork . Coordinating the paperwork is important to ensure the transaction is seamless from start to finish and ensures funds are drawn down as quickly as possible.

Whilst finance companies and banks continue to remain ultra cautious in the current economic climate we are constantly looking for innovative finance solutions to help businesses with their new and used capital expenditure programmes. Unless a business is very profitable and has a very strong balance sheet it is remaining increasingly difficult to obtain funding from the high street finance companies. It seems they are looking for reasons to decline deals as opposed to looking for reasons to agree deals. Who can really blame them when they are suffering unprecedented bad debts and they are being inundated with more proposals than they can actually cope with.

One of the ways XL Business Finance has been helping customers with their capital expenditure plans is by looking at existing equipment and machinery to provide additional security. If the high street funders are not playing ball there are a number of funders that will look to ways of doing deals but they need to be reasonably asset secure. Therefore we can look to take a charge over unencumbered kit to provide additional security for the same funder or it may even be possible to refinance existing assets or machinery with one funder to provide an acceptable deposit for another funder. These structured deals obviously work well where there is substantial kit with good residual values. Therefore printing engineering, packaging, manufacturing businesses all work extremely well.

XL Business Finance was recently approached to look at a substantial refinancing deal for a large outside catering business. The equipment to be refinanced was mainly commercial vehicles converted into specialist catering units. Therefore the assets were not every finance company’s cup of tea.

However not wishing to give up we secured a finance facility with one of our asset based finance companies. You might think job done but oh no. As part of the documentation process a debenture waiver must be obtained from any funders holding a debenture. This would normally be the bank if there is an overdraft or loan in place or it can be from their existing invoice discounting company. Or it can be both.

Any funder having an all assets debenture has an automatic legal title over any assets in the business so the asset refinancing company must get the equipment released from the debenture via a debenture waiver. More often than not it is the banks which can cause issues but imagine our surprise when the non bank owned invoice discounting company would not release the assts from the debenture.

They refused not because the kit was needed as part of their security but because they were reluctant from a dubious legal point of view. This particular invoice discounting company must have racked a large legal bill of several thousand pounds not to mention the legal costs from the customer’s point of view. In our opinion it was totally unnecessary.

The result was the refinance was delayed by a number of months and we are now in the process of switching the customer to a new and more flexible invoice discounting company. Any refinance of existing equipment should be straight forward at documentation stage and if you have had any similar problems we are here to help.

Refinancing existing machinery has got to be the most enquired about business finance product currrently available. As businesses are having their credit lines and overdraft squeezed by the high street banks they are looking for alternative forms of finance. The best sectors are printing, engineering, haulage , recycling and any other sector which uses heavy plant machinery and equipment. The process is relatively straight forward. The finance company obtains a valuation for refinancing purposes. This will be a forced sale value usually obtained from a professional valuer. Subject to status the finance company wil advance 60-80% of the forced sale value. It will be necessary  to obtain a debenture waiver, landlords waiver and proof of title before payment can be made. Although this is a very specilaist markert not all asset finance companies are the same and all have their little quirks in terms of what sectors they like and how they percieve the value of certain assets. XL Business Finabnce has the expertise and knowledge to obtain the best deal in terms of funds out and overall structure!