Asset finance leasing - XL Business finance

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.

Need a commercial mortgage?

October 26th, 2010

XL Business Finance has been helping business for over 10 years with many different areas of business finance. Over the years we have developed a knowledge and expertise in may areas including asset finance, invoice finance and commercial mortgages. However obtaining a commercial mortgage in the current climate is still probably one of the most difficult things to do especially when approaching your own commercial high street bank. Thankfully at XL Business Finance we have a few alternative funders that maybe able to help.

The problem with the high street banks is that they are hung up with the serviceability of the transaction. And unless you have trading profitably for more than 3 years with 3 years positive accounts being produced. It doesn’t matter about the value of the property or the amount of deposit being put into the transaction unless you are quality tenant it wont fly with the bank. Many of these high street banks say they do commercial property but in reality they put up as many obstacles in the way as possible to prevent the deal going forward.

However there are one or two alternatives. There are still one or two London based merchant banks offering funding for the right deal and in deed some of the asset based lenders are starting to dip their toes back in the market ( for the right kind of property)

In addition there are still a number of bridging companies offering funding however the bridging companies tend to be expensive and as such you should be fairly confident as to your exit route as these should only be used as a temporary stop gap.

If you need any help or advise at al about commercial mortgages it is free to pick up the phone. We are a results driven business and unless we can add value to your particular scenario we will just give ou best advise

Factoring and bad debt protection

October 25th, 2010

In the current economic climate bad debt protection or credit insurance will provide much needed protection and comfort should any of your customers go bust. However not all factoring companies offer the same level of protection. Therefore when choosing a factoring company it is important that you take this into consideration.

It must also be remembered that most most insurance and bad debt protection will only pay out when a customer goes bust. If for some reason your customer wont pay or can’t pay but hasn’t gone bust then it wont pay out. This is worth bearing in mind.

A bank based factoring  company may provide insurance from their own in house insurance company. This may be provide a blanket insurance cover if their are any future problems. However this may be further complicated  by the exposure to any one customer. If your exposure is more than say 20% for one customer than credit insurance may be restricted.

An independent factoring company don’t use their own in house insurance but use independent insurance agencies and as such different funders may use different insurance companies and as such levels of insurance from one company to another may vary considerably. It all depends on what their experiences are in varying sectors.

Therefore worth gettting an independent factoring broker to search the market

How do I refinance existing plant and machiery

October 22nd, 2010

Without a doubt we are in for a difficult 12 months. It is difficult to see how the the recently government announced cost cutting will not have a negative effect on the economy. As a business the most important thing will be to protect itscash flow. It is also important not to to be at the beck and call of your clearing bank ( or worse). Anyone with a large overdraft may find themselves in a tricky position. One way to help protect your cash flow is to refinance existing plant and machinery. Admittedly this will only work for businesses which operate some heavy duty equipment however it is an option open to many businesses that may need some extra cash.

Refinancing of existing plant and machinery is a very specialist sector and one that is not normally undertaken by the high street banks. XL Business Finance has over 10 years experience of arranging such finance and as such we will undoubtedly be able to help your find the best possible financing options. Most specialist asset finance companies have very similar pricing structures so the thing that differentiates them is their appetite for a particular sector. Certain asset based lenders are very good at print but not at engineering and so on and so forth. They all use slightly different means to value kit so as an independent broker we will know which lender is best at valuing what sort of kit. This level of expertise and knowledge will help you save time and expense in obtaining the best deal.

 
 
 

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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