There are two ways of arranging asset finance for a new start business. Firstly you can go to your bank or secondly you can go to a third part leasing and hire purchase company. Both options have their advantages and disadvantages. As an independent finance broker we have over 10 years of experience in helping businesses obtaining funding
A bank will offer a certain level of finance for any new start business. If you are lucky you might get a token £10,000 of funding however you might have to wait a few months for a decision and if you get over a certain level you will be required to provide some bricks and mortar as security. In addition you will need to have provided an exceptional business plan and some pretty good cash flow projections. Can I really be bothered I here you saying!
Although arranging asset finance via a third party leasing company is not as easy as it used it can still provide a more flexible approach to getting a deal agreed. If you are a new start business it is very unlikely you will obtain finance from a high a street finance company. The problem is that there are very few actually lending money at the moment. Most have battened down the hatches and the banks are only lending cash for asset finance deals to their own customers, and the long and well established ones at that.
The next tier of funders are more interested in the value of the equipment you are buying from a forced sale value point of view. If you are a new printing company and you are buying a printing press costing £100k and the press has a forced sale or trade value of £60k the very maximum amount of finance you can expect to obtain is £60k. Therefore as a new start business you would be expected to provide a £40k deposit. A very unlikely scenario for most budding entrepreneurs. If you have enough equity in your house you might be able to provide additional security by offering the finance company a second charge over you r property.
Tags: Asset Finance, hire purchase
