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Archive for the ‘refinancing’ Category

How to value equipment for refinancing purposes

Tuesday, March 22nd, 2011

Valuations for refinancing of plant and machinery can vary vastly from customers own valuations and expectations. This is why. Refinance of assets is provided primarily by asset based lenders. Their primary concern is with the value of the kit and their exit route. They are not balance sheet lenders and whilst they will require evidence of serviceability the strength of your accounts is not their main concern.

In the event of the finance company having to take the equipment back they want to know that they can quickly sell the equipment within a relatively short time frame of usually 3 months. And what someone will pay for machinery in a forced sale situation can be a million miles apart as to what you may have to pay for the same piece of kit from a supplier. Unfortunately some directors suffer from owneritus being the condition of thinking their equipment is worth far more than it actually is

Tags: refinancing
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Is it Possible to refinance plant and machinery via a prime funder?

Friday, March 11th, 2011

For the right customer it may now be possible to obtain asset refinancing via a high street finance company. Asset refinance has been a very specialist market up until now. But are things about to change?

Probably not but if you have a very very strong balance sheet and you are looking to refinance for positive reasons then it just may be possible. The flood gates are certainly not going to open but it is certainly worth knowing about.

Asset refinance has always been a specialist area because there are so many pitfalls from the funders perspective compared with just taking an invoice direct from a supplier. With a traditional hire purchase or finance lease transaction it is so so more complicated and an area that the high street have traditionally shyed away from.

The biggest hurdle that a finance company must overcome is obtaining an accurate value for refinancing purposes. This must be a realistic value and should the plant or machinery come back to the finance company in a forced sale this value would need to be achieved in a realistic time frame for the benefit of all concerned.

The finance company must ensure that they get good title to the equipment by ensuring that they have the necessary debenture waivers and ensuring the business can prove that the kit isn’t already on finance. Documentation is also slightly different as there is the possibility of doing the deal on sale and hire purchase back, sale and lease back or loan and chattel mortgage. Which is the best depends on the circumstances around the asset refinance and each deal can be different

Tags: asset refinance, Sale and leaseback
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Using assets to provide additional working capital

Wednesday, March 9th, 2011

Any business involved in heavy manufacturing maybe able to release cash from the value of their plant and machinery. Providing there is value within the machinery cash can be released just about for any purpose. It could be to provide additional working capital, it could be for a one off project or the cash can be used to pay the tax man. Refinancing of existing plant and machinery is a facility which is often overlooked as it is is one that is not traditionally provided by the high street banks and finance companies

XL Business Finance has been helping businesses for over 10 years refinance plant and machinery. In the current economic climate it is perceived that the high street banks are not supporting businesses with their funding requirements.Many business are therefore looking at alternative ways to provide additional working capital or cash for one off projects.

Banks however are not traditionally risk takers and do not have the expertise to provide asset refinance in its purest form. Refinancing plant and machinery is a very specialist area in which there a few funders that have the expertise to do the job properly. There are 3 ways that assets can be refinanced. Loan and chattel mortgage, sale and hire purchase back or sale and lease back. Which facility is best or you depends upon the type of equipment, and the written down value of the kit in your books.

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Print Refinance and Factoring Package

Friday, February 4th, 2011

Chad Monsirrims continues to look for a serial number following a refinance package and provision of a new factoring facility for a Manchester based print company

A Manchester print finance company needed to restructure their finances following an accumulation of VAT and PAYE arrears totalling approx £35k. Their existing Komri printing press had only 18 months to go with their existing funder. XL Business finance was able to refinance the machine and provide enough money to repay the existing leasing company , pay the VAT and PAYE arrears and also provide a surplus for additional working capital. Happy days.

In addition the business switched to a more flexible factoring company to provide additional working capital. The printers existing bank were severely restricting cash flow due to a difficult trading period, hence the crown arrears. A change in factoring company and the refinance of the existing press gave the business a new lease of life.

At one point the company was considering injecting personal cash secured against the press. Whilst this seems a good idea , obtaining title in a refinance situation can present many pitfalls. If the documentation was not completed correctly it may be possible that they could be accused of selling the press under preferential terms resulting in the transaction being null and void. It would also been imperititive that the customer got the right supporting documentation. If you do not get debenture waivers , proof of title etc it may be possible that a transaction be deemed null and void in the event of an insolvency. A specialist refinance company ensures that all this is correctly boxed off and that there can be no repercussions down the line.

Tags: Factoring, refinancing print press
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Refinance printing Machine

Friday, February 4th, 2011

XL Business Finance associate Chad Monsirrims checks a serial number following another successful refinance

Tags: business finance, refinancing
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Machinery Refinancing

Monday, January 31st, 2011

During January our biggest type of of enquiry was for businesses looking for machinery refinance. I suppose that you can look at this from two angles. A business may need to refinance because they are struggling, running out of cash and need to find some funds from somewhere to keep the business afloat. Or they need to refinance machinery because they are doing well, need some additional working capital because the banks are unwilling or unable to help

Most business owners will say it is the latter however in a small number of cases it may genuinely be because a business is struggling. Any asset based finance company will always be willing to lend against the value of an asset providing they are doing so for a positive reason. On the other hand if a business is struggling they may insist that you take advice from a specialist accountant or insolvency practitioner.

It maybe that it it is better to fund a business following a pre packed administration particularly if there is a lot of creditor pressure and crown arrears. Many business owners think that it is not possible to obtain funding following a pre packed administration. In reality, asset based lenders would probably prefer to fund such a arrangement because the new business going forward will be leaner and meaner. It is true that a bank may not wish to assist with the funding however in reality this should not cause any major problem going forward. An independent invoice finance company will be happy to provide a factoring facility and as such there should be no need of a bank except for clearing cheques.

Tags: invoice finance, machinery refinancing
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Refinancing Engineering Company

Wednesday, January 26th, 2011

XL Business Finance has just recently completed the refinancing of a UK based Engineering Company. Managing Director Mark Redman can be seen checking ( or trying ) serial numbers on the customer’s equipment. See below for further details

XL Business Finance was approached at the beginning of the new year by the companies accountant to help a UK based Engineering company purchase new equipment for an existing project. At the same time the business wanted to future proof their cash flow and refinance their existing equipment to reduce their monthly outgoings. Although the new equipment was only £30k a refinance package including the funding of the new kit reduced their monthly repayments from £3500 per month to £2800 providing a monthly saving of £700.

XL Business Finance is one of the UK’s leading independent finance companies with over 10 years experience in the asset and asset refinance market. As with any financial market products and availability of funds vary from month to month with the various funders. The company accountant for this particular engineering company realised the added value a specialist finance company would add to their their client. XL Business Finance was able to source the right level of funding at the most competitive rates and at the same time ensure the finance company completed all the paperwork in a timely and professional manner.

In light of the newly released quarterly trading performance we are in no doubt in line for another rocky 12 months . Refinance of existing plant and machinery may just give many businesses a life line to provide enough working capital to survive until the next upturn

Tags: business finance, refinance of existing plant and machinery
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Attention all Car owners

Friday, January 14th, 2011

Are you looking to raise cash quickly? It is now possible to organise a short term business loan offering your car as security.

If you have a luxury car which is free of finance , you can release the money or equity tied up in your car on a short term basis. This is different from a traditional refinance agreement that provides funding on a hire purchase agreement over a number of years. The finance company will take your car as security which will be stored in a secure facility.

Whilst this kind of offering will not be an option to everyone there are plenty of business owners out there that may have a second luxury toy or car. As you can imagine APRs wont be the cheapest however they never are when it comes to bespoke and creative funding. It does however provide a quick fix alternative to the bank funding which in the current climate isn’t available to everyone.

How it works. A trade value of the car is obtained from the finance company. A percentage of this trade value is is provided on a short term loan. There are no monthly repayments. Interest accrues on a monthly basis and the finance is repaid at the end of the loan agreement typically 3-6 months. This kind of lending is ideal for customers that maybe have a guaranteed lump of cashing coming to them but need something to keep them ticking over

Tags: car finance, hire purchase, refinancing
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Cashflow problems?

Thursday, January 13th, 2011

Just over a week into the new year we have already had several enquiries from businesses having cash flow difficulties following the Christmas break. The first enquiry was for a printing business looking to refinance existing machinery in order to reduce the monthly payment.

In addition the business was applying to its bank for EFG funding of £40k. In our opinion a business that has had some trading difficulties is unlikely to be eligible for bank support even with the banking of the EFG scheme. However the customer didn’t realise that not only could we reschedule the repayments on his main press but we can also release any additional equity. And guess what based on the current trade valuation we can refinance the press, release an additional £50k and provide a monthly repayment no more than he is paying at the moment. Happy days. Well until the cash runs out.

The second enquiry we had was for a timber business importing wood from Eastern Europe. The business until recent years had been fully supported by a high street bank providing a small overdraft and an import finance facility. The business being under pressure from the bank to reduce its exposure came to us for alternative funding arrangements. We were able to introduce the business to an independent trade finance company and as yet we are still awaiting the outcome. Whilst alternative funding is never a guarantee there are alternatives to the banks and it is just a case of knowing who does what!

Tags: cashflow finance, import finance, refinance existing machinery
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How do I refinance existing plant and machiery

Friday, October 22nd, 2010

Without a doubt we are in for a difficult 12 months. It is difficult to see how the the recently government announced cost cutting will not have a negative effect on the economy. As a business the most important thing will be to protect itscash flow. It is also important not to to be at the beck and call of your clearing bank ( or worse). Anyone with a large overdraft may find themselves in a tricky position. One way to help protect your cash flow is to refinance existing plant and machinery. Admittedly this will only work for businesses which operate some heavy duty equipment however it is an option open to many businesses that may need some extra cash.

Refinancing of existing plant and machinery is a very specialist sector and one that is not normally undertaken by the high street banks. XL Business Finance has over 10 years experience of arranging such finance and as such we will undoubtedly be able to help your find the best possible financing options. Most specialist asset finance companies have very similar pricing structures so the thing that differentiates them is their appetite for a particular sector. Certain asset based lenders are very good at print but not at engineering and so on and so forth. They all use slightly different means to value kit so as an independent broker we will know which lender is best at valuing what sort of kit. This level of expertise and knowledge will help you save time and expense in obtaining the best deal.

Tags: refinancing existing plant and machinery
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