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Obtaning Business Finance in a Summer Recovery?

Wednesday, February 3rd, 2010

According to a recent quarterly business index economic survey the general feeling amongst North West Businesses is that their is an air of optimism and enthusiasm about the future. However many of the businesses feel that trading conditions are worse than they were 12 months ago.

In addition 55 percent of the businesses feel that the economy will have recovery by the summer of this year. However one in five feel that it will be two years before the economy fully recovers suggesting that certain sectors of the economy have been hard hit.

This Business factors index has been provided by Bibby Financial services. The index tracks small businesses turnover since 2007 and the trends and information have be collated with the results of over 300 business interviews.

The optimism must be offered with caution. One in five feel conditions are worse than they were 12 months ago. In addition many have had to take cost cutting measures. And one in five don’t think the economy will ave recovered in two years.

Firms in the North West with many involved in Manufacturing have had a tough time during the recession and while we don’t expect an immediate recovery it is clear that many businesses have experienced a difficult few months. Although 2010 ha already provided a number of challenges such as the adverse weather conditions a weak pound is fueling export growth and as such confidence is slowly starting to improve. It suggests that moving forward business are optimistic about their prospects of a recovery.

The upshot is that it will continue to be difficult to obtain business finance. However XL Business Finance has experience of providing innovative finance solutions whether it be equipment finance refinance of existing equipment. We are also vastly experienced in providing invoice finance solutions whether it be factoring or invoice discounting. Give us a ring a ding ding.

Tags: business finance, invoice finance
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Business Financing with Adverse Credit

Monday, February 1st, 2010

Although we are officially out of the recession i firmly believe the economy is still on the edge. As such it will be a long time before banks and high street finance companiesgo back to their cavalier days of lending money to any tom dick and harry. It is bad enough getting finance with a clean credit history and even more difficult if you have any adverse credit. this doesnt mean you wont get finance however you can expect to pay more in terms of interest rates and you will also find the security required will be more onerous.

Luckily XL Business Finance has been helping business for many years with all kinds of business financing requirements. We know how to structure a finance proposal to ensure you have the best possible chance of success. We can very quickly find any adverse data recorded against a limited company and it is advisable to get copies of satisfaction certificates or confirmation of settlements in advance of the application. At very least we need to provide an explanation as to how the adverse info came about and what the plans are if any to address the situation.

If as a director of a newly formed limited company or a transaction which requires the provision of a personal guarantee any finance company will carry out a credit check on you personally. They will need permission of course and if you approach more than one finance company this may leave multiple searches and potentially adversely affect your personal credit score. If you are going to be undertaking a round robin of the UK based leasing and invoice discounting companies we recommend that you obtain your own personal credit reference report. This is cheap and easy to do. If you cant be bothered than we can do it but we will require written confirmation to undertake the search on your behalf.

Tags: business financing
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Business Finance for MBOs

Sunday, January 24th, 2010

There are two ways of obtaining business finance for MBOs. Firstly banks can do cash flow lends or an asset based lender can finance the assets within the business to provide the cash. The problem with banks is that during the recession they have had their fingers burnt with cash flow lends. Significant amounts of money are lent against the future profitability of the business. There can be potentially little security for the banks and it easy to see why the banks have been writing off significant amounts of bad debt. During 2009 banks were doing hardly any cash flow lends however during 2010 we can expect this to increase as the economic recovery start to take effect and the banks relax their cautious underwriting approach.

Structured lending or asset based lending takes a slightly different approach to providing loan facilities. Asset based lending usually starts with an invoice discounting facility which will release up to 90% of a businesses unpaid invoices. On the back of this it might be possible to obtain some form of revolving stocking facility typically at 50% of the value of the stock. An asset based lender will also advance an amount against the value of the assets probably around 70% of the forced sale value. Money is advanced typically with a 3 year pay back. Certain finance companies also provide Enterprise Finance Guarantee Funding usually at the amount equivalent to any directors contribution to the business.

The problem with both these two forms of financing is that you are relying on one finance provider and as such having eggs all in one basket will leave the funder with an awful lot of control over your business. Whilst it is not possible to split stocking finance away from the invoice discounting it is certainly possible to use a unrelated leasing company to provide funding against plant and machinery. Refinancing existing machinery is relatively easy to do provided there is some value in the kit.

Tags: business finance, Enterprise Finance Guarantee, invoice discounting
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Business Financing for a new start business

Sunday, January 17th, 2010

There are so many business financing options available for a new start business. Nearly all the banks can offer a plethora of funding options however which ones are best suited for a new start business.

At XL Business Finance we have been helping many new start businesses for over 10 years and our experience and expertise ensure that a business is provided with the very best business finance options.

Understandably many new starts are drawn to their banks whom can potentially offer equipment and asset finance, commercial mortgages, overdrafts as well as factoring and invoice discounting facilities.

It is tempting to go with the bank who are offering a packaged deal however in doing so you might be storing up future difficulties when it comes to obtaining further credit in the future. Banks are very good at giving it to you with one hand and then taking it away with another. For example, we have seen many instances whereby the bank will offer a small overdraft facility in order to win the factoring business. All that happens is that the customer ends up with reduced limits on the factoring facility to counterbalance the overdraft.

In addition we have seen these initial overdrafts being completely withdrawn after a relatively short period of time. The business would have had far better cash flow if they had gone with a more flexible factoring company .

It may also be that a bank will offer you finance to purchase some assets or equipment. They mat take additional security to provide the funding. These deals may seem very attractive in terms of the interest costs however these assets may just as well be financed via a third party leasing company. A little further down the line you find yourself asking the bank for some fundeing for something which can’t be leased but the bank are fully exposed.

We would recommend that if third party finance is available at the start then this should be seriously considered so you don’t have all your eggs in one basket.

Tags: business financing, commercial mortgages, Factoring
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Business Finance from asset based lenders

Saturday, January 9th, 2010

Business Finance covers a great number of financial products many of which can be provided by independent finance companies as opposed to bank based lending. We would suggest that organising business finance has a great deal of benefits when using independentbased lenders. In the current economic climate it is advisable to spread as many types of lending with as many different lenders as possible. Never has it been more prudent not to have all your eggs in one basket. Fundng from asset based lenders is still relatively abundant therefore in theory it should be easier to be less reliant of the banks.

At XL Business Finance we would recommended that if possible you should only use your bank as a clearing facility. An invoice discounting or factoring facility is preferable to a bank overdraft. Invoice finance grows with the business whereas a overdraft which is repayable on demand will often be fixed at a set amount which depends on the level of security available. An overdraft amount is nearly always never enough.

Also there is absolutely no reason why you should need to have a commercial mortgage with your own bank. There are a number of specialist commercial mortgage institutions offering excellent deals. keep your commercial mortgage separate from your own bank to prevent the bank having too much control, on your businesses finances.

Equipment finance by way of hire purchase and leasing can easily be arranged via third party leasing companies. Again using a different finance company will prevent having too many eggs in one basket.

XL Business Finance has been helping many businesses for over 10 years to obtain the most flexible and competitive funding available in the market place. We understand how to structure a proposal and what information the finance companies require resulting in a very high conversion of our applications.

Tags: business finance, commercial mortgages, invoice finance
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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.

Tags: business finance, hire purchase
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Business Financing in 2010

Sunday, January 3rd, 2010

Without a doubt 2009 was the toughest trading year for any business that most of us can remember ( unless you are selling Pizza or home safes!). No one was expecting the recession however with hindsight it is easy to say ” I told you so”. Twelve months ago there were a dozen or so high street finance companies and banks offering hire purchase and finance lease facilities. At the moment there are only a handful remaining. Many an independent finance company and bedroom brokers have gone out of business. The longer established independents have the experience and expertise to add value to any business financing. At XL Business we have been helping our clients for over 10 years with their business finance requirements. We envisage the banks being extremely difficult for at least the next 12 months so it is important that you use an expert to help your business with your funding requirements.

A fellow broker of mine has a brilliant quote on his website ” You wouldn’t go to your butcher for open heart surgery so why would you go to a bank for financial advise” Dick and Rick if you read this quote I will buy you a pint. At XL Business Finance we couldn’t agree more. We reckon for just about nearly every financial product a bank offers we could find another lesser known financialproduct offering the same product either at a better price or with a much better service. This is particularly true of factoring and invoice discounting products. There are a few instances that we recommend banks but how do you know which one to approach. There are just so many factors that need to be taken into account. One high street bank is very good at export debt for example but only if you are profitable. One high street bank is pretty good at financing contractual debt but how do you know which it is. Give us a call and we can make the referral for you. Its free!!!!

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Tags: business financing, Factoring, invoice discounting
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Commercial Mortgage Finance

Saturday, January 2nd, 2010

Gone are the days when it was easy to get a mortgage just based on the value of the property. Until the credit crunch there were a number of commercial mortage companies offering funding of up to 80% of the valuation of the property. It was dead easy. It was just like getting a self certificated personal mortgage ( and by the way they have all gone from the market as well).

In addition banks were fairly relaxed when it came to advancing money against a commercial property. Has anyone tried to get a commercial mortgage at the moment. It is virtually impossible. At XL Business Finance we have over 10 years experience in helping businesses with obtaining commercial mortgages.

The problem with getting finance at the moment is that the finance companies are not interest in the value of the property. Because truth be known no one really knows how much property is worth in the current economic climate. The financial institutions are all into debt serviceability and the quality of the tenant.

Different finance companies will have different criteria when it comes to debt serviceability and knowing which one is best for your particular requirement is best left to a proper commercial finance broker. If anyone knows one be sure to let me know ( ha ha!).

Seriously though we have access to some of the best commercial mortgage brokers in the market. The best ones are the ones that generally have worked in the banks for 20 years, have decided that there are other options than working in a Bank for the rest of their lives, have a personality and can generally speak your language. The fact they have worked in a bank is a good thing because they know how to wade through all the dotting of the i’s and crossing of the t’s.

And we know who they are!!!!!!

Tags: commercial finance broker, commercial mortgages
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Happy New Year from XL Business Finance

Friday, January 1st, 2010

Unlikely anyone is reading the blog today especially when most people will be hung over in some form or another. However we wanted to take the opportunity to wish all our customers all the very best for 2010. Most of will be delighted that 2009 is behind us which can only be described as the worst year from a business point of view that any us can remember. Anyone who says that they have had a great year is lying. Most businesses have been treading water at best and the ones that have survived 2009 and can survive the continued turmoil in 2010 will undoubtedly be in a very strong position when things eventually start to pick up.

Although there were signs at the back of 2009 that business was starting to pick up 2009 has very much been a year of peaks and troughs and hopefully for your business the peaks have just about been better than the troughs. In our opinion the economy in its very fragile condition will bumble along during 2010 and hopefully we will see a big improvement during the latter part of the year. We expect the banks and high street finance companies to continue to be difficult and as such raising any kind of business finance via the high street will be extremely difficult.

On the up side there are plenty of privately owned finance companies looking for the right kind of deal. Whether it is a finance lease or a hire purchase facility required to help with your capital expenditure requirements or you are looking for a factoring or invoice discounting facility to release cash against your unpaid debtors there will be a finance company somewhere that will be willing and able to help most businesses and scenarios! XL Business Finance wishes every single business all the best in 2010. Lets hope its better than last year!!

Tags: business finance, fcatoring, invoice discounting
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Business Finance for new start businesses

Monday, December 7th, 2009

It is still incredibly difficult for a new start businesses to obtain any sort of business finance via the high street banks. The good news is that there are still a number of independent finance companies willing to provide funding, however they will do so very much on their own terms. It is slightly easier to obtain cash flow funding in the form of factoring or invoice discounting. The independent finance companies tend to be more flexible than the high street banks but there are a number of instances when we would recommend the banks for this form of finance.

Enterprise Finance Guarantee Funding or (EFG Funding) probably isn’t available for new start businesses. This form of finance is only rally available for businesses who have good trading history, are profitable have a project that is viable form a rational and cash floe point of view however there isn’t enough security to enable the banks to make an offer.

Asset finance is available for new start businesses however as a rule of thumb only £10k of finance will be available for each director so long as a personal guarantee is available, the directors have a clean personal credit history and also have a reasonable amount of equity in their properties. Any new start business wishing to purchase assets costing more than £10k face a slightly more uphill struggle. I will tell you how in Mondays blog.

Tags: business finance, Factoring
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