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A guide to financing new equipment and machinery purchases

Wednesday, April 28th, 2010

At a time when many of the high street banks and finance companies are still difficult to deal with it is imperative than any application for hire purchase or leasing facilities to the few remaining finance companies are presented in the best possible format. At XL Business finance we have over ten years of experience and expertese in organising competitive finance facilities for a variety of businesses. The following will give you an idea of the type of information that we will collate and present to the finance company.

1. We will require the last full set of audited accounts. We will need every single page and not just the most recent profit and loss and balance sheet.

2. We will require the most recent set of management accounts . If there has been more than twelve months since the last set of full audited accounts we will require management accounts to the next full year and also the most recent set thereafter. As a minimum we will require a profit and loss and balance sheet. Any finance company will require the most up to date information that is available to ensure that the performance of the business is adequate for their requirements.

3. No matter how big the deal is three months bank statements will help to evidence serviceability. If three months clean bank statements can be provided then this is always be a massive positive in term of evidencing serviceability.

4. Confirmation of working capital facilities will also be useful. A copy of the bank overdraft or factoring facility letter is also a good idea to include

5. Background information will enable the underwriter to understand where the business has come from and the future plans

6. An aged debtor report will evidence the quality of your customer base

7. Most importantly we will need to provide a rational for the purchase. Is the kit replacing old kit? Will turnover increase, labour savings be made or margins increase. It is always useful to know of any existing finance agreements coming to their end which again will evidence serviceability

8. Are personal guarantees available if any

9. Is there any other security available such as unencumbered kit or property which may help to increase security levels?

Tags: Asset Finance, hire purchase
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Success in finding finance for a new printing press

Tuesday, April 27th, 2010

Last week XL Business finance was approached by a London based printing company that needed finance for a second hand print ppress costing approximately £80,000. Although the business was profitable and there was a strong rational for the purchase the deal did not tick all the right boxes for a high street finance company. A well known print finance company was fully exposed at around £250k and were unable to advance an further funding. We received the enquiry via our website and very quickly we were able to secure a hire purchase facility with a privately owned leasing company. This is a prime example as to how a asset finance broker can add value when it comes to organising hire purchase and finance lease facilities.

XL Business Finance has been helping similar businesses for over ten years and as such we have developed a reputation as one of the leading finance brokers in the country. At a time when many of the high street funders are still reluctant to bring up the shutters we can source alternative funding arrangements. Dotted around the country there are many independently owned leasing countries that all have a niche which can accommodate most situations. In addition many of these finance companies will not accept deals from any old asset finance brokers. Unfortunately there are a few bad uns that give us good uns a bad name. Many of them are inexperienced retired bank managers that don’t know how to structure a deal. In order to have the best possible chance of getting your deal agreed make sure that the broker you are using is experienced and has an asset finance background

Tags: asset finance broker, finance lease
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Why should you use an asset finance broker

Friday, April 23rd, 2010

To ensure that you get the best possible deal when financing your capital equipment you should use a well established and reputable asset finance broker that has been around the block a few times and knows and understands the leasing and hire purchase market. Beware of the retired or recently made redundant bank manager as they have absolutely no idea what is available or achievable in the asset finance market. As one of the countries leading asset finance introduces we know exactly which finance companies finance what sort of assets for what sort of businesses.

Whether it is a £1.0m refinancing of existing plant and machinery or purchasing a £5k multi function copier XL Business Finance has numerous funders with cash wanting to do deals. These might not always been well known high street funders however there are still finance companies in the market today wanting to deals. As with any sort of finance they all have their sweet spots and they expect any proposals to be put them in a way that makes them easy to understand. It maybe also that they don’t need as much info as you would normally expet a bank to require. We can certainly get a handle as to what is achievable very quickly indeed without the need for expensive business plans and projections. Allot of the time it comes down to the sort of asset and what other security is available.

And remember that finance is a risk reward business so if your business has been trading for less than three years , has an insolvent balance sheet or has shad a difficult period of trading don’t expect bank rates!

Tags: Asset Finance, finance lease, hire purchase
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Benefits of using an asset finance broker

Monday, April 19th, 2010

Any business wishing to purchase plant and machinery will know that the banks at the moment are not the most accommodating when it comes to asset finance. During the credit crunch any independence the bank owned leasing companies had will have been pulled back in under the umbrella of the main bank. What this means is that now there very little difference in applying for a commercial bank loan or a hire purchase or leasing facility. Indeed you will find that your application for either will probably go to the same underwriter for approval. Never has it been truer that the banks will take into consideration you overall exposure when approving any type of borrow including any outstanding finance lease facilities.

Although credit is hard to come by never has the benefits of an asset finance broker been more important. There are still one or two independent leasing companies in the market that can compete with the big banks. So long as there is not a massive difference in the cost of borrowing why use potential valuable credit lines for purchasing assets and equipment. In deed certain banks will not provide finance lease or hire purchase facilities under £100k preferring to provide loan facilities. Whilst you may think this is the easy option commercial loans do not have the same tax advantages of leasing. For the sake of taking a little effort now it will possibly give you massive benefits in the future.

XL Buisness Finnace is one on the countries lading asset finance brokers and with over 15 years experiance we know all the UKS fiannce companies. All have different sweet spotys and all do things inslightly differing ways . We have the experience and experetese to ensure the best possible funding solutions are sourced for your particulr business.

Tags: hire purchase, leasing
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Leasing Printing Equipment

Wednesday, April 7th, 2010

XL Business Finance has certainly got a great deal of expertise and experience in financing printing equipment. Depending on the type of equipment that needs financing a slightly different approach may be required. For example a company specialising in financing printing equipment will not usually finance digital printing equipment.

A print finance specialist is only interested in the forced sale value of the kit and they will know their exit route in the event of a default situation. They will have a network of dealers and suppliers and even end users that they can shift kit onto. For a business purchasing traditional litho equipment a print finance specialist can certainly add value to any business. They are not hung up with the balance sheet of the business but are more interested in the serviceability and the security in the kit. Therefore a business which is loss making or even is a new start business may be able to obtain finance lease or hire purchase facilities. And if you have a particular press in mind they may be even be able to source a repossession or find a part exchange on another deal they are working on.

This is contrast to digital printing equipment which is viewed as having very little or no security.Therefore first port of call will be a balance sheet lender or high street finance company. providing your business has a at least three filed accounts , is very profitable and has a very strong balance sheet you will have absolutely no problem obtaining finance. Of course every single business is trading exceptionally well at the moment , NOT! There are a few finance companies that will take a view on these sorts of deals but if they are not at the races it will be very difficult to obtain funding without personal guarantees!

Tags: finance lease, hire purchase, leasing
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Using a broker to refinance capital equipment

Wednesday, March 31st, 2010

We totally understand the need to get the best possible deal on any business finance agreement. It is no different whenit comes to raising cash against unencumbered plant and machinery. No doubt any business wishing to refinance plant and machinery will go to their banks first . When they realise that this is an area of finance the banks cannot help with they will probably search the internet for inappropriate solutions. Any search of google will reveal hundreds of companies offering cash against unencumbered assets. The problem is that most of these will be brokers and when it comes to refinancing existing machines and equipment having too many brokers involved can have a detrimental affect on your credit aapplication

We have seen one deal recently where up to eight brokers have introduced the same the deal to one finance company. And the worrying thing was that some of these introducers were in fact mortgage brokers with no experience in the asset finance market. At the end of the day there are probably only half a dozen lenders in this market so all paths lead to the same funder. If a finance company starts to get the same deal from many different sources they will not take the deal seriously because they will know the deal is being touted around the market. They have nothing to loose by providing onerous terms and conditions and their approach will be very much take it or leave it offer.

At XL Business Finance we have over 10 years experience in providing equipment refinance solutions. We do things slightly differently. Firstly we know all the plant and machinery valuers which the different finance companies use. We wll go iect to these valuers and get an idea of the level of security in the deal. We then provide a realistic opinion as to the amount of cash that can be raised against the kit in questions. We will then provide a proposal to the most appropriate funder having already dome our homework on the kit. A clean and realistic application will have a much greater chance of success.!!

Tags: asset refinance, business finance
Posted in Asset Finance, General, refinancing | No Comments »

Obtaining Lease Finance for digital printing equipment

Tuesday, 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.

Tags: business finance, equipment finance
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Grants for Improving Your resource effeciency

Monday, 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.

Tags: efg funding, equipment finance, grants
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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.

Tags: business finance, finance lease, invoice finance
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Is Leasing equipment cheaper than hire purchase

Sunday, 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.