Asset finance leasing - XL Business finance

Obtaining Lease Finance for digital printing equipment

March 16th, 2010

There seems to be a trend for businesses to be investing in digital print technology. We are seeing many traditional litho businesses investing in digital equipment which will enable them to produce high quality short run work at a competitive price. We are also seeing many businesses bringing their print requirements  in house and investing in digital printing equipment which seems to have come of age in terms of quality and cost. For many businesses the investment is a no brainer in terms of the investment paying for itself however obtaining the necessary funding can prove a challenge for many businesses. This article may help you understand as to what is achievable in terms of finance.

XL Business Finance has been helping businesses with business finance for over ten years. Whether it be finance lease or hire purchase we can structure the application in order for you to get the best chance of success. The problem is that all finance companies will view digital kit as unsecured lending and therefore the business must have a very strong balance sheet, be trading for more than 3 years and be profitable. If finance is not forthcoming with a prime lender then a business may find themselves caught between a rock and a hard stone. The business isn’t strong enough for a prime or high street finance company however the other sort of finance company is an asset based lender which will view the kit as have no security and as such will not provide funding. There are a number of sales aid finance companies which specialise in financing this sort of kit however they all require personal guarantees and they will only lend a max of £10k per director. For obvious reasons most directors don’t like to provide guarantees but for many businesses this may be the only option.

Grants for Improving Your resource effeciency

March 15th, 2010

If your business is planning to make a capital investment that will reduce carbon emissions, waste or water consumption than your business may be eligible for a grant. The project must contribute to reducing CO2 emmissions  and generate wider environmental benefits.  XL Business Finance has teamed up with a firm of  local accountants that specialise in obtaining grants and business funding. Experience shows that if a specialise company apply on your behalf you have a much greater chance of success. Combined with equipment finance from XL Business Finance a project that otherwise may have been out or reach suddenly becomes a possibility.

There are however a number of criteria. Projects that have already started will not be eligible  and cannot be funded. The minimum capital expenditure spend must be at least £20,000 There are also a number of restrictions to the grants which include production of synthetic fibres, textiles and clothing, shipbuilding, coal and steel, agriculture, food processing, banking ( bankers don’t deserve any money in any case), insurance , education, local social welfare. In addition all other possibilities of funding must have been exhausted included bank loans and EFG funding. So long as the project is either for  water usage, energy generation and control, recycling, information technology, transport or waste reduction then it is worth giving us a call.

Attention all car owners!

March 14th, 2010

If you are looking to raise cash quickly  we can now offer a short term funding solution using your car as security. If you have a luxury car free of finance , you can release the moneytied up in your vehicle on a short term basis. The cash can be used for any purpose, e.g a deposit on a house or to ease a short term cash flow problem. During the term of the loan the car would be stored in a secure facility and would be delivered back to your door when the loan is repaid. The interest rate will vary depending on the individuals credit worthiness .

Although the interest rates on this might be quite high at circa 4% per months this will provide many individuals and businesses a life line. If you consider it  is very difficult to obtain refinance against a luxury vehicle and the min period is usually two years the flexibility that this product offers may actually prove quite good value. It doesn’t matter how bad the applicants credit is , so long as you are prepared to hand over the keys and you can prove title finance will be available to just about anyone. Please give XL Business Finance  a call today to see how much cash we can release against your pride and joy.

Obtaining business finance for a new start company.

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.

Is Leasing equipment cheaper than hire purchase

March 7th, 2010

Many businesses contact us assuming obtaining leasing facilities for new equipment will be a) easier to obtain and b) cheaper than a traditional hire purchase facility. The answer is monthly repayments and ease of obtaining credit is exactly the same. The only difference being slightly different tax treatment. Which finance facility is best for your business depends on your own requirements and preferences.

In both cases the supplier will expect full payout of their invoice and therefore the hirer will be repaying the full cost of the equipment plus interest wheher it is hire purchase or finance lease.  The differing tax treatment is as follows.

With hire purchase all the VAT is paid up front and at the end of the final payment legal title passes to the customer. The equipment is shown in the customers balance sheet as an asset with a corresponding liability for the hire purchase element. The asset or equipment  is written down on a reducing balance basis and as  much as 50% of the capital cost of the equipment can be claimed  in the first year. Therefore  hire purchase may be more tax efficient in the first year especially if the business is making large profits.

With finance lease the vat is spread over the term of the lease agreement therefore from a cash flow point of view it can help businesses that are short of cash. Instead of claiming writing down allowances the monthly payment is offset in the profit and loss account and as such the full taxable benefit is obtained in exactly the same number of years of the term of the agreement. The big disadvantage of a finance lease facility is that the hirer cannot get direct title at the end of the agreement. A finance lease agreement will kick into secondary or peppercorn rentals usually the equivalent of one months payment on an annual basis. Title is usually obtained by selling the goods to a third party and retaining 90-95% of the sale proceeds.

Grants for Business Investment

March 3rd, 2010

If your business is planning to invest in capital assets (ie plant and machinery) and/or new staff for expansion, rationalisation or diversification then your business could be eligible for a grant. If the project is yet to start and the your business serves or plans to serve more than a local market than European Grant monies may be available. XL Business Finance has teamed up with a specialist firm of chartered accountants to provide a free assessment of your eligibility for a grant. The initial assessment is absolutely free and a fee is only payable on the successful draw down of a grant.  No grant no fee!

The minimum grant available is  £10k and provided that all other areas of funding have been exhausted then funding may be awarded for between 10-35% of the total project cost therefore other sources of business finance must be secured to prove that the project is financially viable.

Following an initial meeting and a draft a project proposal which is discussed with the funding body and we get feedback within 2/3 days as to whether or not the business is likely to be successful with a grant application. It is important that you use  the best possible expertise and experience in making sure that the application is dealt with in the correct manner to obtain the best possible chance of success. It is  possible to go though the process yourself however experience suggests that it is better leaving it to the experts. From start to finish the process should take no more than six weeks however a business left to their own devices may take as long as six months wasting time energy and money. Far better to take the money now pay someone to do it and avoid making a mistake which leaves your application worthless.

Any business which has applied for the ECFG funding and has been declined may find a greater chance of success with the possibility of a grant. XL business Finance has over 10 years experience in providing innovative funding solutions and this is just one of the many areas we may be able to add value to your business.

Invoice Finance and Stocking Finance

March 2nd, 2010

At a time when it is becoming more and more difficult to obtain working capital through traditional banking facilities many businesses are looking to alternative and possibly more flexible form of finance. Invoice finance combined with stocking finance is an asset based finance product that can provide additional working capital over and above traditional invoice discounting and factoring facilities.

There are very few invoice finance companies that will offer a true stocking facility. There are some that they say provide finance against stock but it usually on the back of a factoring or invoice discounting facility to provide no more than 100% of your debtor book. In addition the loan or overpayment is only on a short term basis that will need repaying over a relatively short period of time. However there are definitely two or three UK based invoice discounting providers that provide a true revolving stocking facility. Again this must be provided in conjunction with the factoring or invoice discounting facility. As far as we aware there are no finance companies that will provide a stocking facility on a stand alone basis.

How much of a facility you can obtain against stock depends on the type of business you are in, how specialist the product is and the potential market for the stock. As a rule of thumb expect to get no more than 30% of our initial outlay. We are looking at a invoice discounting and stocking facility for one customer at the moment and their total stock is in excess of £2.m can potential provide a facility oF £600k over and above the 85% debtor book. This will provide much more working capital than the bank can ever provide and as such is known as a no brainer!


To make sure you are speaking to a funder that provides a true revolving stocking facility give XL Business Finance a call today and we will point you in the right direction.

Asset Finance in an MBO

March 1st, 2010

Amongst all the turmoil of the last eighteen months we are still seeing one or two opportunities to fund management buyouts.  This makes a change from the business going bust and new directors and shareholders  buying  the business off the administrator. In terms of providing funding there are fewer options than there were before the credit crunch however asset finance is becoming more and more prominent as a option to top up other types of funding.

Once upon a time you could go to many high street business banks and obtain a cash flow lend against the turnover and the profitability of the business. The amount that could be borrowed bore no resemblance to the individual assets of the business, mainly buildings , debtor book and plant and machinery. It was once possible to obtain funding much higher than the total worth of all these assets. These sorts of loans are virtually impossible to come by nowadays because many of the banks have had their fingers burnt as business have failed during the recession leaving the banks highly exposed.

Nowadays it would appear that traditional asset based lending would be the way forward. A commercial mortgage, factoring and invoice discounting and a bit of asset refinance to top up the facilities. If the vendor requires any more cash than it is usually done by way of deferredpayments. However asset finance and asset refinance is playing a more and more important part of the MBO process. It is important that an asset finance specialist can provide the best possible options for refinancing your kit. There are various finance companies that specialise in engineering , printing and commercial vehicles and they use their own experiences and supplier network to value equipment . There are also a number of general funders that use professional valuers to obtain valuations for refinancing purposes. At XL Business Finance we use our knowledge and experience to make sure the best possible option is provided for your business.

Switching Invoice discounting company

February 25th, 2010

Contrary to popular belief switching factoring or invoice discounting companies is relatively straight forward.  However it is more difficult if the exiting funder doesn’t want want you to leave.  Under extreme circumstances the existing discounting company will have notice periods built into the terms of the deal which  they will require paying in full. As notice periods could be anything from a  month to six months a chunk of minimum payments can soon add up. However if the relationship has totally broken down the existing provider may be willing t0 reduce their fees and the new provider may be willing to contribute to the fees to ease the pain so to speak. In addition a minimum contract from one to three years is not unusual and this must also be taken into consideration.

How you will be dealt with depends on the existing provider. Many of the banks prefer to keep a very clean and straight forward portfolio and if you don’t meet the banks strict criteria they will be more likely to let you go without a fuss. They dont want to be seen hindering a business especially if it is one of our government owned institutions. One of the biggest enquiries at the moment is for businesses wanting to switch from bank owned factoring and invoice discounting comapnies to more flexible providers.

Once all parties have agreed to the move there is a code of conduct that exists between the two funders. The new finance company will set up their  own trust accounts and the existing funder will sweep any money coming to the old accounts and pay it across until your customers get to grips with the change of banking arrangements. Hopefully the small amount of pain will result in new found financial freedom and flexibility. So there!

Bank restricting my invoice discounting facility

February 24th, 2010

Ok, I know I keep harping on about the banks and potentially having too many eggs in one basket however we have recently come across a situation which shows the banks for what they truly are.

Approx 12 months we were approached by a engineering company with a turnover of approx £12m to help source a competitive invoice discounting facility. They were banking with a well known high street bank that shall also remain nameless. A commercial mortgage was in place with the same bank for approx £500k against a fairly recent valuation of £1.1m so plenty of security here thank you very much. We recommended a totally independent invoice discounting company so the bank wouldn’t have too much control. The cost via the independent would be appox £30k of service fee for running the facility compared with what the bank who were offering the facility at a loss leading £12k per annum. From a cost point of view a no brainer however if trading conditions were to take a turn for the worse this could leave the customer exposed to the mercy of the bank.

Now then 12 months down the line and because one of the group businesses have struggled the customer has been placed with the banks specialist care unit and as such is facing massively increased costs.

The service fee has been increased by 1%,  the interest rate has been increased by 0.75% and a monthly management fee of £1200 per month for monitoring the business has been applied. In addition a one of fee of £10k is being charged to verify the management information and cash flow projections. All this adds up to a whopping additional £50k per annum. Ouch!

Although this business has a £100k overdraft facility they are currently running stock at £2.5m. Within in two weeks we expect to have the customer uplifted from the bank with a new invoice finance company complete with a revolving stocking finance loan providing the business with an additional £200k working capital even after paying off the bank overdraft!


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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