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Benefits of using a commercial finance broker

Tuesday, April 13th, 2010

With Easter over for another year, now is an appropriate time to discuss not having all your eggs in one basket for next year?

Almost every day we see lenders creating serious issues with companies who have their main trading account, invoice discounting , asset finance lines and property loan with one funder. Whilst there can be rare occasions when this is of benefit to you it is better for you to split your banking.

One of the main reasons for having just one funder is that the owners/directors of business don’t want to have more than one relationship as they don’t have the time to manage multiple lender relationships. This is a valid point but the pitfalls can outweigh the advantages. Two examples seen recently:

1 Wife of director had finance refused on a new car she was purchasing. Husbands business showed a loss through management information which was a condition of the bank’s overdraft facility.

The Bank had advised all of its subsidiary companies of the loss, even though the next month it was back in profit.

2 Client wanted to move his invoice finance line to another provider to provide more funds. Bank refused to allow this as they also had a property loan to the business and wanted to retain the invoice facility as additional security

It’s becoming more common for companies to interact with their funders through a third party or commercial finance broker. Whilst your accountant could do the role owners/directors are turning to experienced finance professionals who understand how banks work.

By anticipating any issues and working with all parties this improves the relationship with the funders and saves the owner/director considerable time which is better spent on running their business. This could be for a specific project or on a retainer basis.

Tags: commercial finance broker, invoice discounting
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lnternational Trade Finance

Sunday, April 11th, 2010

Most businesses will go to their banks to organise international trade finance facilities which is great if you are a profitable business, have a very strong balance sheet and also have plenty of security to offer. One high street bank is very strong at international trade finance. No prises for guessing but feel free to give us a call if you are stuck. So what happens if you are not strong enough to organise funding via the high street to help you purchase of buy imported goods. Thankfully there are one or two options available to help the less profitable and established businesses.

Firstly there a one or two specialist factoring and invoice discounting companies that provided you have a buyer for your imported goods will provide a trade facility for you to import. They lend you the cash against the goods and as soon as they hit the UK and are delivered to your end user either the customer pays for the cash immediately or the trade facility is repaid from a factoring or invoice discounting facility that will repay the trade facility. Simple provided the margin is good and the goods are non perishable this kind of trade finance shouldn’t be an issue

Secondly there are one or two independent financiers that under the right circumstances will provide letters of credit without the onerous security that the banks require. The facility works in exactly the same way as above that the trade facility of letter of credit is repaid from the sale of the goods to your end user or customer. Again this can be by cash on delivery or provision of factoring or invoice discounting facility on the raising of the invoice.

XL Business finance has over 10 years experience in helping business with innovative finance solutions which might not necessarily be available fro the high street banks and finance companies.

Tags: Factoring, international trade finance
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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
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Commercial Mortages UK

Monday, March 29th, 2010

In the current environment of banks being difficult in terms of providing new funding it might be worth mentioning another reason why a business should use another invoice discounting company other than their own bank particularly where a commercial mortgage is involved.

When a bank has got too much of a handle of a businesses finances and their is a requirement for additional funding, due to the overall exposure it might be difficult to obtain the required additional working capital. In extreme cases the banks may view this as a signal that the business is in difficulty and pull in some investigative accountants. In our opinion all banks are interested in is covering their own position and have little desire to help a business trade thorough any difficulties.

Unfortunately it is not straight forward to switch from one invoice discounting company to another invoice discounting company when a commercial mortgage is involved. One would think that a commercial mortgage is a stand alone facility which really it should be. However as soon as invoice discounting is taken out a all assets debenture will be registered against the business which will also include the property as well as plant and machinery

We have seen a few instances where the bank have in principle agreed to let the invoice discounting business go but in reality it has taken months and months to do the transfer because of the incumbent bank wont realise the book debt from the debenture. In reality a deed of priority will be required in complicated cases however these can take forever and a day and as we know dealing with the banks legal departments can be like pulling teeth,

The best way forward is always to keep different finance products separate from different finance products and as such you will never find yourself in the mercy of one bank.

Tags: commercial mortgages, invoice discounting
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Specialist Lending Units

Wednesday, March 24th, 2010

Recently we have had a number of enquiries from businesses that need help and advice because they have ended up in a banks specialist lending or intensive care unit. If a business has had a dip in performance thee banks take the opportunity to move the business to this specialist division of the bank. Whilst the business does not need to be a basket case the cynical amongst us might think that the banks are taking the opportunity to slap a load of unnecessary charges onto their customer. Any business having such an experience will know all too well that they use this as an opportunity to increase interest rates and charge monthly management fees. In deed many businesses don’t ever come out and allot will end up going into administration. If ever there was a case for not having too many eggs in ones basket!

For many years we have been advising customers not to have the same clearing bank which they use for invoice discounting or factoring and if at all possible to use a total separate financial institution for any commercial mortgages. Any business which has adopted this three pronged approach to banking and business finance will find themselves protected from the uncertainty of been exposed too much with one financial institution.

Any business finding themselves at the mercy at the banks can look at alternatives. They are out there and we know how to handle the banks. We have over 10 years experience in dealing in such matters and we will certainly be able to help and add value to your business.

Tags: business fianace, invoice discounting
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Factoring and EFG funding

Thursday, March 18th, 2010

It is most commonly believed that the only way to obtain EFG funding is via the banks. On the basis that two high street banks have written nearly 80% of all EFG funding it is easy to understand why. However it is not commonly known that it is possible to obtain EFG funding on the back of a factoring or invoice financing agreement. This may prove very beneficial because the banks can be difficult to obtain funding even when the additional security of the EFG guarantee is available.

There is a misconception that because an EFG guarantee is available from the government that funding will automatically be approved. This sadly is not the case. Any application for business finance via the banks must firstly meet with that particular banks strict lending criteria. Providing that the application ticks all the boxes in terms of meeting the bank criteria and the only reason the bank can not do it is because of lack of tangible security then this where the EFG loan guarantee scheme will kick in. So if the application is a basket case it wont get passed the first hurdle.

Therefore if your application for EFG funding has been unsuccessful via the banks it may be worth looking at efg funding via a factoring or invoice discounting facility. Independent factoring and invoice discounting companies tend to be more flexible than the banks so you have absolutely nothing to loose.

Tags: efg funding, Factoring
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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
Posted in Asset Finance, General | No Comments »

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
Posted in Asset Finance, General | No Comments »

Attention all car owners!

Sunday, 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.

Tags: car refinance
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Business Finance without using a bank

Sunday, February 14th, 2010

It goes without saying that the high street banks have a captive audience when it comes to providing business finance. Most businesses will turn to their business banker in times of need. Whether it is a bank overdraft commercial mortgage , equipment finance or invoice finance your friendly manager will be only too please to help. Remember though when it comes to the different forms of business finance for every high street bank offering finance their is an alternative independent company offering funding.

Once upon a time it was possible to get a package deal with the bank. They might do one product as a loss leader and as such the overall funding was priced very competitively. The problem of having all ones eggs in one basket has become evident over the last year or so. Banks have been found to wanting at times and it is very true that they are great at giving their customers umbrellas but as soon as it starts raining they want them back.

In our opinion the independent business finance companies provide a product that is very competitively priced however the levels of service and flexibility can far exceed those of the banks. This is very true when it comes to factoring and invoice discounting. Whilst for certain types of business there are certain banks that we would recommend as a whole independent provide a far more approachable and flexible service.

XL Business Finance has been helping its clients for over 10 years to obtain the most appropriate invoice factoring and invoice financing facilities. The cheapest is not always the best and a by undertaking a brief review of your business we can provide two or three funders ( probably ones you may not have heard of before) that will knock the socks of the banks in providing the right level of service and flexible funding that your business requires.

Tags: business finance, invoice finance
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