Asset finance leasing - XL Business finance

Who Is doing Enterprise Finance Guarantee Funding ( EFG ) ?

November 17th, 2010

The banks are supposed to be helping small businesses obtain difficult funding in these difficult times and one way is via the EFG or Enterprise Finance Guarantee. Whilst  the EFG does not guarantee success of funding via the banks there are one or two viable alternatives via the invoice finance companies.

The problem with the bank based scheme is that a proposal for funding should meet all the banks normal lending criteria. If you have a proposition that they want to do but the only thing that is stopping them doing it is a lack of security then this is where the EFG scheme gives them the security to do the deal. If for some reason they don’t want to do the deal because your business hasn’t been trading long enough or the financials are not strong enough then it wont get passed first base. EFG funding does not make a bad deal good.

An alternative to bank based EFG loans could be funding via invoice finance companies. One funder provides EFG funding on the back of a factoring or invoice discounting company match funding any directors loans but up to a maximum of fifty percent of the debtor book. Another invoice finance company provides EFG funding to give a business 100% of its debtor book.

Invoice finance companies tend to be a little more flexible than the banks therefore if you have drawn a few blanks then it is worth giving them a call. We will gladly point you in the right direction.

How do I obtain Export Finance?

November 16th, 2010

Export finance is very simply funding your foreign invoices via way of an invoice discounting or factoring facility. This is a very specialist market in the invoice finance sector and as such only a few finance providers can offer a proper facility.

A number of these specialist invoice finance companies have a network of offices and associations spread around the world offering multi currency facilities and credit control. Obviously it is easier to obtain funding in developed countries however it may be possible to obtain funding in less developed parts of the world so long as your customer has a credit rating.  As with any factoring or invoice discounting product different companies are better in handling different sectors than others. Just because you go to your bank and they inform you  that it is not possible to factor foreign invoices it doesn’t mean it cannot be done via a specialist lesser known finance company.

A good independent finance broker will be able to introduce you to the most appropriate funders. Again it is important to be talking o two or possibly three finance companies so it doesn’t become a one horse race. However if you invite every tom dick and Harry of a finance company non of them will take you seriously an in our experience you end up getting a worse deal.

XL Business Finance has been helping business for over 10 years find the most appropriate funding partner. Give us a call today to see how we can help your business. Go on you know you want to!

Import Finance explained

November 15th, 2010

Basically there are two types of import finance. Firstly there is the type whereby you are importing pre sold golds and import finance is provided on the basis that you have pre sold the goods. Secondly there is the type where you are importing goods however they have not been pre sold and as such funding is providing based on your track record of selling these goods.

Funding for pre sold goods is certainly more straight forward and is available for most types of businesses and products. Perishable goods become more difficult to fund for obvious reasons. Businesses that have been told by their bank that they are not eligible for funding have a very good chance of obtaining funding via the more flexible and independent trade finance companies. The finance company not only can provide funding for the import element but it can also provide funding via invoice finance as soon as your goods are delivered to your customer and an invoice is raised. Therefore it is possible to obtain funding from start to finish. The finance company does this by taking title of the goods at the start of the transaction and not releasing title until the goods have been paid in full via your end user.

Banks tend to provide trade finance based on the track record of the business. Their exit route is not necessarily the guaranteed sale of the goods to your end user but is based on the ability of the importer to sale the goods and repay the facility. Therefore from a high street banks point of view a  business must be well established , profitable and ideally bank with themselves to be considered for funding.

XL Business Finance has over 10 years of experience and expertise in helping business choose the right funding solution

Purchasing A Commercial Property Via a Pension Fund?

November 12th, 2010

If you need help in releasing money from your pension to buy commercial property you should take advice from and independent financial adviser (an IFA) specialising in this area. As an independent finance broker we have been working with specialist IFAs to bring their pension funds into play to help our clients raise money to buy commercial property. Combined with a commercial mortgage this may provide the perfect funding solution.

Here are a few notes to help you decide whether this might be a good idea for you.

Type of Property

    • Freehold or leasehold is acceptable
    • The trustees own the property, the plan holders are the beneficiaries
    • The company leases the property from the pension plan trustees on normal commercial terms (supported by professional valuations)
  • If the trustees are happy to purchase the property on behalf of the scheme beneficiaries and they are able to confirm that it meets the criteria of the Inland Revenue for assets of an approved tax exempt pension plan, then they are able to use existing plan assets and mortgage to purchase the property
  • The trustees are also normally willing to consider refurbishment or renovation of the property to maintain it’s value, but this must also be approved in advance
  • It is possible to use either a Self Invested Personal Pension (SIPP) or a Small Self Administered Pension Scheme (SSAS) as the vehicle to purchase property
  • It is possible for SIPP and SSAS plan holders to pool their assets to purchase property together.  

The trustees are able to borrow up to 50% of the value of the fund (this means that where the pension fund is valued at say £150,000, the trustees can borrow a further £75,000 and purchase a property valued at £225,000).

The first stage is a feasibility check – to confirm that the pension trustees would be willing to consider the investment and then compare the advantages and disadvantages of a pension funded property purchase with a straightforward company funded property purchase

Suppliers Needing Vendor Finance?

November 11th, 2010

There are many hire purchase and finance lease companies offering equipment finance. Most will offer their services to vendors and suppliers of equipment. However as a supplier of capital equipment how do you know that you are getting the best possible value for your customers and end users. XL  Business Finance has had over 10 years experience in providing funding solutions to end users via vendor finance and supplier arrangements and as such we can certainly add some value and provide some sensible advice.

As with any type of finance different finance companies like different types of kit and operate in different market sectors. It is important that you get the correct sort of funder for your particular business. It is also important that you do not put all your eggs in one basket. A good independent finance broker will have access to various funders that will meet most eventualities. There are a number of big financial institutions that will offer vendor finance arrangement however if a deal doesn’t tick all the oxes then they wont go the extra mile to make the deal happen. Rest assured we pride ourselves on our supplier relationships and will turn every stone in our efforts to obtain finance. In addition we know the the asset lenders inside out and after a brief assessment via companies house and or a chat with the customer we will know exactly which funder to approach and what information will be required. This can save an awful lot of time wasting and effort.

Pension Funds and Asset Finance

November 8th, 2010

As many business owners are aware it is possible to invest in commercial property using a pension fund. The benefits of such a plan have well been documented. However it is also possible to  purchase plant and machinery using asset finance via the pension fund. Whilst on the face of  it , it would appear pointless purchasing a depreciating asset in such a manner there are a number of major advantages  in doing so. Whilst XL Business Finance cannot provide specific advise we were recently involved in such a scenario. Read on!

A major plant hire customer needed some equipment for a new contract. Whilst there was nothing wrong with the credit worthiness of the business we all know that there are few high street funders offering decent rates. Get fully committed with these funders and the second tier can prove very expensive. Organising a loan via the pension fund provided some very very competitive funding indeed.

So what about the tax side of things. Whilst the equipment itself will depreciate over a period , the contract the kit was  being used for would generate a significant amount of income. This income would therefore be paid into the pension fund in a tax effeicient manner. The return on the initial investment was many many times greater than the initial investment and prooved to be some clever tax planning. Whilst this kind of scenario will not work for every business itr is an option that business owners should be aware. XL Business Finance cannot provide specific pension and tax advise however I think this illustrates the concept quite nicely.

Can I get Trade Finance ?

November 5th, 2010

It is now possible to obtain trade finance on a stand alone basis subject to the type of goods you are buying and selling. Traditionally cash for trade finance deals have only been available from the banks via an overdraft facility or a specialist but onerous division of the bank.

International and domestic tade finance is available from most factoring and invoice discounting companies however the god news is that there one or two funders coming into the market that can provide funding on a standalone basis.

Imagine the scenario. You have either pre sold goods with little trading history or you have an exceptional track record of selling goods but you don’t have the cash to purchase your goods. You go to your bank and they dont want to help because you haven’t been trading long enough or you have had a poor trading history ( from the view point of a bank)

A specialist trade finance company has the ability to provide you with your much required working capital. Depending on the stock you are buying, the margin in the deal, who the end customer is and the length of time it takes to sell the goods, funding may be available on a stand alone basis.

Trade finance can also be used in conjunction with a factoring or invoice discounting facility to provide a complete funding solution.

 Unlike the banks that promise the earth and take an age to say no we will be able to provide you very quickly as to wheteher funding may be possible. Give us a call today to find out on 0161 980 0577 or 020 3301 4540

Construction finance for contractors

November 3rd, 2010

One of the most common enquiries we get is for contract businesses looking for additional working capital to expand their businesses. The problem is that they have been to the bank and been refused an overdraft and they have been told they are ineligible for factoring or invoice discounting due to the nature of their contracts. The good news there are a number of invoice finance companies that other construction finance or contract finance.

We had such an enquiry just yesterday. As per normal the enquiry was for a different  however unsuitable form of finance. The enquirer had been told by a number of different sources that they were not eleigle for invoice finance and as such they had been trawling the inter net for business loans and approaching the banks for overdrafts. As we know the banks are\ still being over cautious resulting in a number of dead end enquires.

XL Business Finance with our ten years of experience in this sector was able to introduce a number of specialist funders that would be willing to fund invoices raised against contracts. Hopefully this will give the business the much needed working capital to grow and expand the business and take on more available contracts.

Stocking Finance explained

November 2nd, 2010

There are a number of variety of stocking finance options and depending on your particular circumstances there are a number of different products. Depending upon the the finance company you approach these different products may be called something completely different from one finance company to another.

Firstly let me explain we are unaware of any financial institution that offers stocking on a stand alone basis. It is usually provided with another finance product.

The most common form of stocking finance is provided on the back of a factoring or invoice discounting facility. A true stocking facility will provided a a percentage of the total monthly stock on a rolling contract. Beware certain invoice finance companies offer stocking finance but t is only to provide additional security to enable them 10% of your debtor book. Whilst funding in this instance  is technically stocking finance the over payment will be reduced over a period of time. There are only a few invoice finance companies that offer the full rolling stock facility and therefore it is worth giving us a call to check.

Stock finance may also be provided as part of a trade finance agreement. Where a business has confirmed orders it may be possible to obtain 100% funding from start to finish. This can either be on a domestic basis or on an international basis. An international trade finance facility will enable a business to import goods and where there are confirmed orders finance can be obtained from start to finish. When the goods are delivered to your customers premises a factoring or invoice finance facility will dovetail with the trade finance facility and provide seamless funding. Therefore technically speak international trade and domestic trade finance could be viewed as stocking finance as well

Cash Flow Loans Explained

November 1st, 2010

A traditional cash flow loan from a banks point of view would be based on the turnover and profitability of a business. Before the recession cash flow loans were a prelevent form of bank lending.  They were often used in management buy outs to raise cash to buy the businesses along with other purposes. It was not out of the question to raise funds many times greater than the actual value of the tangible assets of the business.

During a buoyant economy this kind of lending is absolutely fine however as soon as things slow down, as they did recently, serviceability may become an issue and as such the banks find themselves with large loans to businesses with very little or no security. It is no wonder the banks have had such a slating recently for lending on this basis. The recession hits and the banks no longer lend on this basis and are accused of not lending any money. It appears to me that they dammed if they do and dammed if the don’t.

The alternative to cash flow lending is asset based lending whereby a bank or financial institution lend against the asset of the business. These are predominantly invoice finance companies that will lend up to 90% of a businesses debtor book, provide a commercial mortgage, lend approx 50% against any unencumbered machinery and also have the ability to lend against stock and in  certain circumstances provide international trade finance.

Whilst a bank has the ability to provide asset based lending they don’t tend to have the expertise as some of the specialist lenders and as such it is often worthwhile speaking to an independent business finance specialist to see what alternatives are available. XL Business has over 10 years experience in helping businesses in this often overcomplicated sector of business finance.

 
 
 

XL Business Finance Ltd is a privately owned and independent business financing company with established links to many of the UK's leading finance houses. XL Business Finance provides a viable alternative to high street banks that lack the flexibility and imagination to provide a solution to most business users requirements. XL Business Finance can provide a full range of business financing solutions and we ensure a high level of customer service and pride ourselves on quick decisions. Our independent status will ensure any offer of funding and asset finance leasing is best suited to our customer’s needs.

XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.

 

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