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Obtaining business finance for a new start company.

Tuesday, March 9th, 2010

Obtaining business finance for a new start business is most difficult at the best of times. In the current economic climate it is even more difficult especially if you approach your local high street bank for funding. Anyone who has had the pleasure will realise  that many banks promise the earth and after providing expensive business plans, cash flow projections and numerous meetings deliver very little. And more likely than not if they can do something they will want to take a charge over property and the wife and kids. The good news however is that XL Business Finance has been helping many new start businesses obtain various forms of finance.

There are still many non bank owned financial institutions providing hire purchase and finance lease facilities for new start businesses. Providing that the directors are home owners with a bit of wool on their backs it may be possible to provide finance depending on the cost of equipment and the quality of the guarantor. Most finance companies will require a personal guarantee which says if the business doesn’t pay then the director as an individual will be liable. The directors must definitely be home owners with little or no adverse credit. If in doubt with your written permission we can do a personal  credit check on your behalf.

In addition invoice finance in the form of factoring should be relatively easy to obtain. Again providing the individuals as directors are relatively clean and the debtor book is of reasonable quality a decent locally based invoice factoring company will be able to provide you with cash against your unpaid invoices.

 Which finance company is best for your particular needs depends on the industry that you operate , your geographical location and your estimated turnover. Again XL Business Finance will be happy to assist you find the most suitable funding partner.

Obtaining Finance for equipment

Thursday, February 11th, 2010

iceXL Business Finance has over 10 years of helping businesses obtaining finance for equipment by way of finance lease or hire purchase facilities. Never has it been more difficult to obtain funding. Most of the high street finance companies have totally withdrawn from  the asset finance and leasing  sector. The likes of Bank of Scotland and  Barclays used to have very active asset finance divisions which they have completely closed down. It didn’t matter if you didn’t bank with either of these two companies they would do lease and hire purchase deals for just about anyone. Nowadays they wont even do deals for their own customers. If hey do they tend to do it on loan facilities and obtaining funding is very difficult as you will be dealing with the usually slow banking process.

Thankfully there are one or two finance companies still lending money via the broker market however they have become more choosy as to what deals they will do. It is simple supply and demand. They don’t have as much cash as they used to do and they have far more delays to do then they used to have. Combined with an increasing bad debt provision it becomes understandable as to why it is getting harder to obtain credit.

It is therefore imperative that any application for finance is presented to the finance company in the best possible manner. WE don’t necessarily require projections business plans and cash flow forecasts. However we do need an understanding as to the rational for the purchase and we also need to evidence serviceability. So long as we have some recent management accounts and 3 months bank statements we will be very quickly be able to provide an indication of terms for  any available finance. It is far better to get all this information up front rather than presenting it to the finance company in dribs and drabs. We can help a business get the right information together.

Arranging Lease finance

Saturday, January 23rd, 2010

Arranging lease finance or asset finance is still increasingly difficult to obtain. The market for prime lending has changed considerably over the last eighteen months as the high street lenders are still taking a precautionary approach to lending. Before the credit crunch and the recession most of the high street banks had an asset finance division in addition to the core commercial banking. As the banks started to suffer losses and the availability of cash to the bank themselves began to dry up these asset finance divisions started to wind down these operations.

 From an independent brokers  point of view, before the recession most of the asset finance divisions would all take broker business. There was Lombard,  Bank of Scotland  , Yorkshire Bank and Barclays to name a few. Whereas now the banks are tending to look after their own customers and wont accept broker introduced  business. Therefore if you go to your own bank and perhaps you are not strong enough to get approval there are few high street options available. In addition some high street banks wont offer hire purchase or finance lease facilities less than £50k. HSBC is a prime example. They might agree a facility for you however it will be done a straight forward commercial loan which means taht if you go back to your bank for some further funding you risk the possibility of not being able to get further funding.

 The good news is that there are still one or two finance companies that deal exclusively with the broker market that are willing to take 3rd party business. XL Business Finance has had over ten years experience of helping such businesses. Credit is still tight to come by and as such we can add value to your business because we know exactly how to structure a deal for a finance company in order to get the best possible chance of approval. Believe you me it is worth the effort because the next tier of funders are extremely expensive!

Leasing Printing Machinery

Saturday, January 16th, 2010

As we know printing equipment can be categorised into two types. Digital high tech equipment and traditional equipment such as litho presses. There are a number of specialist print finance companies currently lending money and you wold think it would be easy obtaining finance as they know the market. However it is not as simple as that because different finance companies have differing views of  the suitability of  digital and non digital as security for a finance lease oir a hire purchase agreement. XL Business Finance has an area of expertise in the print sector and has been helping many printing businesses arrange finance for over ten years.

For example it is unlikely you will get a print finance specialist to finance an expensive  digital printer. A print finance company is more interested in the residual value of the equipment and their exit route if they  such a machine came back to them in a distress situation. Print finance companies know the litho market and a certain degree the flexo market very well and as such tend to stick to financing these sorts of machines.

It is therefore more likely you will get finance for a digital piece of kit or a non ltho piece of kit from a traditional balance sheet finance company. So long as we can evidence serviceability, there is no adverse information and your business is profitable than you have a good chance of geting finance approved.

The problem is when a business that has been struggling wishes to buy digital kit which is perceived as having very little security. There isn’t enough value in the kit to get the print finance companies interested and the balance sheet isn strong enough to justify an advance from a high street bank owned finance company. Potentially the only way is to provide additional security by taking a charge over existing kit or even property.

Need to arrange equipment finance?

Friday, January 8th, 2010

There are two very  different types of finance companies when it comes to arrange equipment or asset finance. There are balance sheet lenders and there are asset lenders. They approach things in completely different ways.

 Balance sheet lenders are typically your banks and high street finance companies. They are more interested in how long a business has been trading, how strong the balance sheet is, how profitable a business is and without a doubt you must be able to evidence serviceability. They are looking for businesses trading f0r more than 3 years without any blemishes on their trading history. If there are any county court judgements finance will tend to be declined. If your investment is £100k for example they will expect to see a net worth of at least that amount.  If your business is strong enough for balance sheet lending you can expect to obtain very favourable interest rates and excellent terms for hire purchase and finance lease transactions.

The problem is that the high street lenders are being very picky about who they will lend money to. A business which could have obtained funding from a bank 18 months ago may find that they are given the cold shoulder at the moment. It is a combination of banks tightening up their underwriting criteria combined with a lack of cash in the market which has caused basic economics of supply and demand to kick in.

The alternative are the asset lenders. These finance companies are specialist finance companies that will value equipment and lend a percentage of their perceived forced sale value. Therefore a new machine costing £100k may only have a day one forced sale value of £60k which might mean they will only advance £50k against that piece of equipment. The remaining deposit would therefore need to be found by using additional equipment to provide a more secure transaction. XL Business Finance has been providing funding solutions for over 10 years.

Is Asset Finance getting easier

Saturday, December 12th, 2009

During the last few weeks we have seen an increase in businesses requireing asset finance solutions in the form of hire purchase and finance lease. This has got to be good news for the economy however is it any easier to obtain credit approval for investments. The answer is maybe however at XL Business Finance we take a slightly different approach in organising finance for our clients. As a result our success rate is very high at getting acceptances for our clients.

Until the credit crunch there were many banks and high street finance companies wanting to your business. There was plenty of cash around and the terms and conditions were fantastic. Low interest rates, minimal deposits  , long terms , no personal guarantees were all too common place. The last twelve months however have been the complete opposite. Banks as we know have shut up shop and getting funding from a finance company other than your own bank has been very difficult. Therefore to get the best possible chance of  success it is absolutely imperative that your application for funding is presented to the finance company in the best possible light. XL Businesses finance are truly one of the UKs leading independent finance company,  its Managing Director has over 20 years experience in the finance industry.

It is not always necessary top provide detailed business plans and cash flow projections. So long as we have the right info including a full set of the last audited accounts, recent management accounts, bank statements to evidence a well run account together with the rational for the investment you will have the best opportunity of obtaining the best possible finance deal. If there is any other information that will help such as copies of finance agreements coming to an end this will all help. Get it wrong and there is a massive difference between the prime funders and the next tier of funders if indeed you are able to get finance at all.

Tips on arranging Equipment Finance

Saturday, December 5th, 2009

There is definitely evidence that things are picking up  in the finance and leasing market.  Well they are certainly in terms of businesses buying  equipment and requiring fiance. This time last year the industry went very quiet and has been really for the last 12 months. Businesses put capital expenditure plans on hold and battened down the hatches. Twelve months on and we are starting to get more asset finance  enquiries. Some of this might be out of necessity as vehicles and machinery  becomes uneconomical to keep repairing.  Or, it might be because businesses have the attitude that if we can make the investment work in the current climate we may as well crack on with it now because when things really pick up we will be well placed to take advantage of any upturn.  Great however until you go to your bank and cannot get any funding. In order to get the best possible chance of an approval for your funding requirements information must be presented to the finance company in the best possible manner.

XL Business Finance has over 10 years experience of arranging hire purchase and finance lease  facilities for our clients. Obtaining finance has never been more difficult. There are far fewer finance companies than there used to be and the ones that are left do not have an unlimited pile of cash. It simple supply and demand. Submit your application in the wrong way and it will just get  binned. The finance companies don’t have enough cash to be bothered with the marginal applications. Why should they bother lending money to the business that cannot be bothered getting up to date management information, doesn’t provide a rationale for the new aquistion or can’t be bothered providing bank statements. As an independent finance broker we understand the requirements of the different fiance companies and as such can add value to any capital expenditure projects.

How do I refinance existing Equipment

Saturday, November 21st, 2009

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.

Asset Finance Leasing cont

Tuesday, November 10th, 2009

High street finance companies are what we would balance sheet lenders. They are more interested in the strength of the business in terms of how long it has been trading, how profitable it is , the size of the net worth and the affordability of the new project or capital investment. If your business ticks all the boxes than they will offer a hire purchase or finance lease facility. High street finance companies take less notice of the actual piece of equipment or machinery you are purchasing however tend to categorise different types of equipment offering differnt levels of security.

Asset lenders are less interested in the balance sheet but more in the actual value of the equipment. Asset lenders will obtain a valuation of the equipment or machinery to be financed or refinanced and Will lend a percentage of its perceived forced sale or trade value. Therefore it is quite possible that a business might buy a piece of kit costing £100k and an asset lender will put a forced sale value on it of £60k however might only lend £48k needing the customer to find a substantial deposit.

Therefore if you are struggling to obtain a traditional finance lease or hie purchase facility with a high street laender or balance sheet lender it is possible you might find yourself caught between a arock and a hard stone. Your company isnt strong enough on paper for the high street lenders but the value of the equipment isnt enouugh to make the project work because you dont have enough deposit. Unfortunately there is very little inbetween at the moment as their are fw finance compnaies left in the middle ground.

To make sure you have the best chance of succeeding with a high street finance company you need to make sure that the proposition is presented to the finance company in the best possible light. XL Business Finance has over 10 years experience in dealing with complex proposal on behalf of customers and our expertise in this area will greatly enhance your chances of success.  If the high street is a non starter we also have the expertise to deal with the asset based lenders to structure a deal which may enable you to move forward.

Vehicle Finance

Friday, September 25th, 2009

There has been a recent increase of customers wishing to replace commercial vehicles.  There are many different ways of providing vehicle finance and which option is best  depends on the circumstances of each business. In additionthe dramatic change in fortunes of many businesses and indeed finance companies has dramatically changed how vehicles can be financed.

 Weare seeing many businesses coming off contract hire deals and needing to replace vehicles passed their best. The problem is that the funders are very difficult when it comes to agreeing contract hire deals. If there have been any trading issues or  changes in circumstances contract is not the easiest form of finance to get approved.

XL Business Finance however has sourced a number of commercial vehicles recently at much bigger discounts than if the customer had just walked in off the street. This is because we deal a multi franchise car and commercial vehicles supplier which deals with all the contract hire companies. The savings are potentially massive. We tend to put these vehicles straight onto a hire purchase or finance lease agreement and the monthly payment is often not much higher than they would have been paying on a normal contract hire deal. In addition the vehicle which becomes the property of the business at the end of the agreement can be used for a further payment without any additional cost or can be used in a deposit in your next 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.

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

 

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