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Purchasing A Commercial Property Via a Pension Fund?

Friday, 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?

Thursday, 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.

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.

Financing Equipment from a Foreign Supplier

Tuesday, October 20th, 2009

Financing eequipment from a foreign supplier might not be as straightforward as one would think. Strangely however the larger the transaction the easier it is. Different finance companies have different views of what can and cannot be done so it is worth speaking with a good independent finance broker that can guide you though the various options.

There are only a few finance companies that can help with hire purchase or the finance lease of equipment from a foreign supplier. It is always worth trying to get the finance in place well in advance of you actually requiring the facility. As most finance companies will agree a facility for a max of 90 days it is best working out your options no more than three months in advance.

There are two ways of funding equipment in this way. The first is for the customer to purchase the equipment from the foreign supplier. They will have entered into an agency agreement authorising the customer to purchase the quipment on behalf of the finance company. In the terms of the agency agreement it will have been agreed that the finance company will then provide a finance lease agreement or a hire purchase agreement to the customer. Certain finance companies will will only transact these agreements at a certain level because of the  amount of paperwork involved. The other disadvantage is that the customer must be expected to pay for the goods up front. Sometimes if the foreign based supplier  requires paying in advance then this can be the only way to finance plant and machinery supplied by foreign suppliers.

If there is a good relationship with the foreign supplier  you may still have to enter into an agency agreement however it may be possible  for the finance company to pay the foreign supplier direct. For this to happen the goods must have landed on the UK so the finance company can inspect the goods.  It may even be possible to structure a deal so no VAT is paid to the finance company. This only works with non UK invoices. Give us  a call to find out!

Banking in a recession

Monday, October 12th, 2009

The recent publicised report stating that intrest rates will stay at 0.5% until 2011 and will remain below 2.0% until 2014 suggests that recovery from this recession will be longer than expected. In terms of the banks attitude to risk and lending I think we can see a protracted inflexible and cautious stance on lending for many years to come.

It is easy to blame the banks for the mess we are in but personally I think we as individuals are all as much to blame as is the government. The banks are indeed  to blame for their lax lending policies of recent years. As a finance broker we saw many business finance deals agreed by the banks at very low interest rates  and at amounts which in our opinion were too high for the businesses concerned. The banks had lost sight that lending money is a risk reward business. As individuals we are to blame for our materialistic and must have now and pay later attitude. Is it correct that the average house hold has over £20k of credit card debt? No wonder there ae so many personal bankruptcies at the moment. And the government must be partially to blame for not regulating the whole thing in the first place.e

The bottom line is the banks have had their fingers burnt. They ain’t suddenly going to start landing like the good old days. Thankfully there are many independent finance companies willing and able to add value and help where the banks cannot.

Invoice Discounting

Friday, September 18th, 2009

Although invoice discounting is a great means of freeing up cash against unpaid invoices it is becoming increasingly more difficult to secure an confidential invoice discounting facility. Once upon a time a business had to have been trading for at least 3 years , have at least a £1.0m turnover and have a very strong balance sheet.

In the good old days when there was plenty of cash swilling around the system  all the finance companies were competing with each other for business and it is fair to say that the usual criteria for confidential invoice discounting were relaxed somewhat.  New start businesses, phoenix businesses and  businesses with far from strong trading performances were being offered facilities.

Invoice discounting and in particular confidential invoice discounting is susceptible to fraud and in these difficult times finance companies are reverting back to the more stringent criteria for invoice discounting. Therefore if a business is financially weak, turnover is below a certain level or even credit control systems are weak it is more likely that a business will pushed down the factoring route.

If the business doesn’t quite meet the criteria for confidential invoice discounting it maybe possible to organise a disclosed facility whereby the customer is is responsible for their own credit control. Which ever way you decide to o it is worth shopping around as different finance companies have different criteria. Even better get a decent independent finance broker to do all the hard work.

Lombard and Hitachi exit Broker Market

Sunday, September 13th, 2009

Last week Lombard finally closed their doors on the broker market. A few days later Hitachi followed suit. Rumour of Lombard exiting the broker market came as no great surprise however I don’t think anyone expected Hitachi to exit as well. Only a few months ago Lombard had significantly reduced the number of brokers they were dealing with and rumours of significant losses in the sector  there was only going to be one outcome.

This is still bad news for the market with the exit of  the UKs largest leasing company. There will be even less choice of funders in the market place and the ones that remain wull potentially increase their rates and be even more choosy  with whom they will do business. It is simple economics of supply and demand. The good news that there are still one or two funders remaining that are still open for business. A good independent finance broker will certainly  be able to add value and will still be able to structure a deal with the lessor known leasing companies.

Whilst funds remain tight deals will be done on the funders terms. Customers can expect higher deposits, shorter terms and the need to provide more security  such as personal guarantees. The good news is that there are rumours of a couple of foreign banks looking at entering the UK leasing market. Still tough times ahead I am afraid.

Declined Finance

Wednesday, September 9th, 2009

Finance companies and banks  are still short of capital. They all tell you they are open for business but in reality they are still short of cash. In our opinion are they are looking for reasons to decline deals rather than agree them. In short it is simple supply and demand. As a result interest rates available in commercial lending do no really reflect the current low bank base rate.  If you have been declined finance a good independent finance broker may be able to help you source finance. There are still a number of lessor known finance companies who are actively growing their books and very much open for business.

If you have been declined finance by a bank it could be possible you are caught between a rock and a hard stone. Businesses investing in capital equipment may find that their profitability and balance sheet is not strong enough to justify a high street finance or bank lend. There are very few  near prime funders that will take a few especially if the equipment is not a traditional piece of kit with a good residual value. Asset lenders are still very much open for business. However they will only lend against a professional valuers forced sale value typically at 80% loan to value. Interests rates are much high than the banks and nearly all deals require the directors to provide a personal guarantee. IF there is not enough value in the assets being financed it may be possible to use existing unencumbered equipment to provide additional security. Next step would be to look at taking a charge over property. Not what you want to here I know but it is very much a lenders market!

Prestige Vehicle Finance

Friday, July 10th, 2009

XL Business Finance was recently approached by a prestige vehicle dealer who had been struggling to obtain finance for one of his clients. His usual sourses of finance were struggling to obtain the necessary funding. As an independent finance broker we were able to approach the finance market and find business finance via a specilaist prestige vehicle funder. As a result the owner and director is now driving around in his spanking brand new Ferrari. The same business has just ordered a pimped up Porsche cayenne to be financed via the same funder.

The finance comapny we used was a small not so well known privately owned finance company. Although the customer was very profitable, had a grade one credit rating and a muti million pound net worth, suprisingingly the high street finance companies and banks did not want to finance these vehicles. In addition a very substantial deposit was avialable from the customer.

The stance from the balance sheet lenders on prestige vehcle funding at the moment is that they just dont want to do it. It appears that they will not finance fund luxury items which are not core to the main business activity. This is most unfair as it is just another example of the banks and high street finance companies restricting cash and compouding the credit crunch. The bankers are having their wings and bonusses clipped so why should anyone be driving around in a nice car if they can’t. Kill Joys!

It also adversely affecting the residual value of prestige vehicles as little finance is available rsulting in the plummiting values! Vehicle finance options.

Invoice Factoring (1)

Monday, April 6th, 2009

Invoice factoring or account receivable factoring still continues to be very bouyant  in the finance market. Not all factoring and invoice discounting comapnies are the same. All have slightly differing lending criteria  and many add value in different key areas. A good independent finance broker will ensure the particular need of your business is matched with the most appropraite funder.


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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