Asset finance leasing - XL Business finance

Attention all Car owners

January 14th, 2011

Are you looking to raise cash quickly? It is now possible to organise a short term business  loan offering your car as security.

If you have a luxury car which is free of finance , you can release the money or equity tied up in your car on a short term basis. This is different from a traditional refinance agreement that provides funding on a hire purchase agreement over a number of years. The finance company will take your car as security which will be stored in a secure facility.

Whilst this kind of offering will not be an option to everyone there are plenty of business owners out there that may have a second luxury toy or car. As you can imagine APRs wont be the cheapest however they never are when it comes to bespoke and creative funding. It does however provide a quick fix alternative to the bank funding which in the current climate isn’t available to everyone.

How it works. A trade value of the car is obtained from the finance company. A percentage of this trade value is  is provided on a short term loan. There are no monthly repayments. Interest accrues on a monthly basis and the finance is repaid at the end of the loan agreement typically 3-6 months. This kind of lending is ideal for customers that maybe have a guaranteed lump of cashing coming to them but need something to keep them ticking over

Cashflow problems?

January 13th, 2011

Just over a week into the new year we have already had several enquiries from businesses having cash flow difficulties following the Christmas break. The first enquiry was for a printing business looking to refinance existing machinery in order to reduce the monthly payment.

In addition the business was applying to its bank for EFG funding of £40k. In our opinion a business that has had some trading difficulties is unlikely to be eligible for bank support even with the banking of the EFG scheme. However the customer didn’t realise that not only could we reschedule the repayments on his main press but we can also release any additional equity. And guess what based on the current trade valuation we can refinance the press, release an additional £50k and provide a monthly repayment no more than he is paying at the moment. Happy days. Well until the cash runs out.

The second enquiry we had was for a timber business importing wood from Eastern Europe. The business until recent years had been fully supported by a high street bank providing a small overdraft and an import finance facility. The business being under pressure from the bank to reduce its exposure came to us for alternative funding arrangements. We were able to introduce the business to an independent trade finance company and as yet we are still awaiting the outcome. Whilst alternative funding is never a guarantee there are alternatives to the banks and it is just a case of knowing who does what!

New Finance company enters Asset Finance Market

November 23rd, 2010

One of the biggest problems a business faces today is the lack of finance companies in the asset finance market. Some of the big high street banks will provide hire purchase and leasing facilities for some of their better customers wishing to purchase capital equipment.  If your bank is unwilling to support or you don’t want to have all your eggs in one basket as far as third party funders there is only one. ING Lease has probably been the only only decent third party funder operating in the asset finance market. Their rates are good however they can only be accessed via the broker network.

After ING  organising funding has been slightly more difficult . Whilst ING are a great funder if for some reason they dont want to play ball the next best alternatives in comparison are far more expensive and onerous in terms of security required. Asset based lenders will only lend a percentage of the forced sale vale and their funding costs all start around 12% nominal. Alternative leasing companies willing to take a view will only lend £10k per director and will always undoubtedly require personal guarantees.

The good news is that there are one or two finance companies entering into the market. Both are pitching themselves not as competition to Ing and your own high street bank but are positioning themselves between these funders and the expensive asset based lenders.

This has been an area in the hire purchase and leasing market where there has been somewhat of a funding gap. Any business that is not quite strong enough for prime rates may have found themselves stuck in the middle of a rock and a hard stone as the kit did not meet the requirements for the pure asset based lenders. Only time will tell as to whether these new funders start to mop up these deals.

Can I get 120 days factoring finance?

November 22nd, 2010

Most factoring companies provide a 90 day factoring service however with some providers it is possible to get close to 120 days without any additional charges.

With most finance companies the clock starts ticking on the day you submit the invoice, however with one or two providers the clock starts kicking at the end of the month.

Therefore if you submit an invoice say on the second of the month the 90 days don’t start until the end of that month.

For many businesses this additional working capital as customers seem to be taking longer and longer to pay. If you are factoring with a company that starts the 90 days the day you submit your invoice you potentially will pay more charges and have a reduced funding line. As soon as you hit 90 days and if your customer hasn’t paid then the value of that invoice will be deducted from your available allowance restricting available cash. In addition if there isn’t enough of an available allowance you will go over your agreed prepayment possibly triggering expensive charges for over payments.

Indeed it has been recently suggested that certain finance companies hold back cheques and don’t pay them to their clients account until a day or so after invoices become disallowed after 90 days therefore triggering charges.

Surely not. The fact of the matter is that customers should be paying within the 90 days and a good factoring company should be collecting debt in the necessary time scale. Unfortunately this doesn’t always happen and as such a few extra days funding can make a big difference.

A good factoring broker will be able to add value and select the most appropriate finance company for your particular requirements.

It may be possible to get 85% LTV on a commercial mortage!

November 18th, 2010

As we know all banks say that they are open for business. Saying and doing are two completely different things. Following an interesting meting this AM with a well known high street bank they reckon they are open for business and could possibly do up to 85% LTV on a commercial mortgage – for the right customer. If there is anyone out there that has been fortunate enough to obtain such funding we would love to know.

In reality obtaining a commercial mortgage will be very very difficult indeed. Long gone are the days that anyone could get up to 80-85% LTV based purely on the asset value rather than their ability to repay. Nowadays the LTV is less important and the most important aspect of any deal is the quality of the tenant and the ability to repay. Therefore if we have a blue chip business making loads of cash within undoubted serviceability needs an 85% LTV commercial mortgage then they may get it. A business that is struggling obviously will not.

The main point here is that all banks and financial institutions say that they are open for business. In reality this is a complete load of whats it. However finance companies do blow hot and cold invariably dipping their toe in and out of the market. To save a load of wasted time a good commercial finance broker will be able to find  the right finance comapny pretty quickly

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.

 
 
 

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.

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

 

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