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Obtaining Business Finance in the New Year

Monday, January 4th, 2010

Happy New Year to all our customers and potential new customers. 2010 is undoubtedly going to be an interesting year. On the one hand we started to see a recovery towards the back end of 2009. The number of enquiries we were getting from businesses requiring help with asset finance was definitely on the the up. From our point of view we were definitely starting to see the green shoots of recovery. On the other hand the government must seriously eat into the deficit created by quantitative easing. We are expecting an increase in taxes and massive cut in governmentspending. In our opinion the economy is still balancing on a cliff edge. So what does this mean in terms of obtaining credit.

In our opinion it will still be a very difficult year dealing with the banks and financial institutions. Unless there is a further injection of cash from somewhere it is simple economics of supply and demand. There is a shortage of cash in the market and the banks will continue to cherry pick the best deals. Most of the proposals we are seeing for hire purchase and finance  all have a story to tell. None of them are straight forward and over the last twelve months  most businesses have had a number of issues. Until we are completely out of the recession the banks and high street finance companies will still be very difficult to deal with.

The good news is that are still a number of independent finance companies able to offer finance for most eventualities. It is is just a case of knowing what which finance company will do what. XL Business Finance has over 10 years experience of helping businesses obtaining business finance for a variety of projects. We believe we can add value to the funding requirements of most business so give us a call today to find out hoe we can help you.

Refinance existing plant and machinery

Wednesday, December 30th, 2009

It is possible to refinance already owned plant and machinery to release cash for just about any purpose. There are only a few finance companies capable of doing such financial transactions and most of them are independently owned. It is very unusual for a high street finance company to do such transactions. They simply don’t have the expertise to carry out such transactions. It is not as simple as raising an invoice from the company to the finance company. there is faf more to it than that. XL business Finance has been trading for over ten years and is one one of the uk’s leading asset finance broker. We genuinely believe that if we cannot sort the finance than it cannot be done. To find out how refinancing existing plant and machinery can benefit your business then read on.

Most asset lenders provide funding on a similar costing which incidentally is considerably higher than any bank funding. This is because the asset based lenders will borrow money from the banks at a normal commercial rate put on a margin and lend it to businesses wishing to release some cash. These asset lenders your their experience and expertise to lend businesses money which the banks are not prepared lend. These specialist lenders know exactly how to value equipment. They will obtain valuations from professional valuers, trade dealers and use their previous experiences in particular equipment. Based on this info they will lend a percentage as what they think is the trade value. The documentation is a little more complex than a straight forward hire purchase or finance lease transaction. These finance companies also know their exit route. If a piece of kit comes back from  a distressed business they know how to dispose of the kit quickly and at the best possible price. This will also protect the directors whom may have provided personal guarantees

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.

Arranging asset finance for a new start business

Sunday, December 6th, 2009

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.

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.

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.

Leasing plant and machinery

Monday, November 2nd, 2009

As an independent finance company we are certainly busier than we have been for the last 12 month. The level of enquiries and business written during September and November has been back to pre recession levels. Wether this remains at this level remains to be seen but  there are certainly some encouraging signs. Hopefully we have finally turned the corner however we envisage it will be many months and possibly years  before the financial institutions and banks start freeing up their lending criteria.

This time 12 months ago we were seeing many businesses putting plans on hold and unwilling to commit to any capital expenditure projects. And who can blame them not knowing the severity and duration of the forthcoming recession. Now 12 months on and I think the general consensus of opinion is that whilst things are not great they probably are not going to get any worse. Therefore if a business can make their plans and plant and machinery investments  work in the current climate there is an attitude of lets crack on with it because when business really picks up we will be well placed to reap the rewards.

Although we are hopefully out of the recession banks and finance companies will remain to be tight for months and even years to come. Combined with the lack of liquidity in the finance markets it will be still remain difficult to arrange hire purchase and leasing facilities for the foreseeable future. There are few leasing companies actively lending and many of the banks are looking after their own customers and only the good ones at that. Fortunately there are still a few funders still lending money and a good independent finance broker will be able to source the most appropriate funding.  It is most important that all the correct financial information is presented to the appropriate finance company to ensure the best chance of success.  This is where XL Business Finance has many years of experience and expertise and we will endeavor to make sure your finance needs are fullfilled.

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.

Invoice Finance

Tuesday, September 1st, 2009

Invoice Finance is simply the means of raising cash against unpaid invoices. It is totally a means to raise cash and as a rule has no added value service.

However in the current economic credit crunch the biggest problem customers face is getting decent trade limits against their customers which can have an adverse affect on their cash flow. The biggest source of enquiry is customers complaining of derisory credit limits and asking if there is an alternative available. The truth is that there is very little difference between the funders however it could be argued that a larger independent will provide more flexibility than a high street bank.

We believe the most important aspect in choosing a invoice discounting facility is that a business spreads the risk. Until recently it is so easy to take an invoice discounting facility in conjunction with a small overdraft, even some Hire purchase and maybe a commercial mortgage. Remember a bank is great at giving you an umbrella but soon as it starts raising they want it back. We have recently seen an instance recently whereby a customer went bust. This affected the invoice discounting facility and because it was group banked the overdraft was withdrawn and the business went into administration. This would not have happened if the invoice finance had been separate.

Lloyds Blame HBOS for £4bn Losses

Wednesday, August 5th, 2009

Apparently the LLoyds banking group has made a pre tax loss of £4billion in the first six months trading of this year. This is the result of Lloyds taking over HBOS where an unprecedented amount of risk taking led to its failure and ultimate bail out by the tax payer.

I bet LLoyds wish they hadn’t bothered now. More interestingly  if the bad debts of HBOS are stripped out, LLyods would have made a operating profit of £6bn. It makes you wonder what sort of cretins were running HBOS so that £10bn of bad debts have effectively been written off in the first 6 months of this year.

The outlook is that LLoyds will right of more bad debts in the second half of this year, but thankfully not as many. The long term outlook is that LLoyds are predicting a recovery in 2010.

Up until the credit crunch we saw many risky deals being done not only by HBOS but by other prime lenders as well. Not only were these deals being done in the traditional banking sector, very risky deals were being done on equipment finance. We were seeing some hire purchase and finance lease deals being agreed which in our opinion it would be unlikely a second or third tier funder would approve.

Not only that, once a deal was agreed no account of the risk was taken into consideration and the deals were being priced too cheaply. Bank and asset finance is a risk reward business and financial institutions have an obligation to balance their portfolio in terms of risk and pricing. It appears the banks have learnt their lesson and for the time being rates will continue to be priced accordingly.


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 Limited are authorised and regulated by the Financial Conduct Authority FRN 718737).

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


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