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Why use an asset finance broker?

Thursday, October 20th, 2011

Do you need assistance with finding a hire purchase or finance lease facilities for new or used capital expenditure projects?  XL Business Finance has access to many specialist asset based lenders providing you with competitive deals many of which are not available via the high street banks.

Never has a good asset finance broker been able to add so much  value to businesses in this difficult economic climate. There are many reasons why you should use a broker a few of which are provided below.

Many high street banks are only providing hire purchase and finance lease facilities for their own customers that meet a certain criteria. If your business is good enough to meet this criteria then great. However many are not. If you have a good business but perhaps are fully exposed with your existing bank or you would prefer not have all your eggs in one basket there are still a few prime lenders that deal purely with the broker market providing an alternative to the high street banks. These funders are happy to provide 3rd part hire purchase and finance lease deals which sit alongside your existing agreements.

If your business has however has had a number of issues an experienced asset finance broker will be able to package the deal in the best possible light from an underwriters perspective. This ensures that  you have the best possible chance of success with the most appropriate finance company. There are still many smaller lessor known finance companies that provide funding for many different businesses assets and circumstances. It is simply a case of getting the correct information and making sure we are dealing with the most appropriate funder.

Bank Loan or Hire Purchase

Tuesday, March 29th, 2011

It is becoming increasingly common for high street banks not to offer hire purchase or finance lease facilities especially for transactions sub £50k and even sub £200k with one bank. Although your bank may offer funding  for purchasing plant or machinery they are increasingly doing so by term loans. These loans are not necessarily secured against the assets being purchased but are agreed based on the trading performance of the business and security such as land already being in place. Although you may get a slightly cheaper rate than by going to an independent asset finance broker you run the possibility of tying up future lines and overexposing your business too much with one financial institution. If you can do we would recommended spreading the risk about!

Will my bank give me the best asset finance deal?

Monday, March 28th, 2011

Other than a businesses own bank there are still only a few independent asset finance companies offering hire purchase and finance lease facilities. And depending upon which bank you are with you might not get offered asset finance at all. If a bank wants to deal with you then you will get some of the best deals possible. However do you really want to tie up valuable banking lines which may restrict your future ability to obtain funding. If you can get funding via a third party funder it is always advisable to spread it around a bit. You may have to jump through a few more hoops but it will certainly be worth it!

Asset Finance and CCJs

Wednesday, March 23rd, 2011

The fact that a business has CCJs doesn’t necessarily prevent it from obtaining asset finance, however it certainly makes it more difficult. Most high street asset finance companies such as ING Lease will not touch a business with a CCJ. XL Business Finance recognises that not all CCJs are the fault of the directors.

We are therfore regularly providing hire purchase and finance lease facilities for businesses that have CCJ registered against the business. We recognise that they picked up due to disputes with suppliers or over zealous creditors. as long as there is a credible reason then it is certainly possible to help.

Is Leasing cheaper than paying cash?

Thursday, February 17th, 2011

There is certainly an argument for using asset finance to fund equipment. The main reason I would say, is that cash is always better in the bank than tied up in assets. “Cash is King” as they say. I have seen many cash rich companies pay cash for assets and then due to a change in circumstances wish to refinance the kit because they have run out of cash. The problem is that to refinance equipment after it has been purchased is always far more expensive! 

Equipment can be purchased either by Hire Purchase or finance lease.

There is an argument to say that leasing is more tax efficient as the whole of the monthly rentals can be offset against taxable profit, Therefore the full tax allowances are obtained over the same  period of the lease. It can be argued that the return on the cash left in the business is greater than the cost of the finance lease less the tax benefit. At the end of the finance lease the business continues to pay a secondary rental or can obtain title via a third party. Anywhere between one or 3 additional monthly payments will need to be paid 

Hire purchase has slightly different tax treatment whereby capital allowances are claimed on a reducing balance . An option to purchase fee is paid with the final payment typically £50 to obtain clear title

As a rule of thumb most accountants would recommended equipment and hi tech assets that have a limited life span and are regularly replaced should be financed on finance lease and long life assets be funded on HP. Each customer will be different and should really speak to their own accountant to determine the best way forward.

Sourcing Equipment Finance

Thursday, October 21st, 2010

Any business wishing to organise equipment finance for new or used capital purchases may find that the banks not very accommodating at the moment. Any Managing Director or Finance Director may possibly not know who to turn to . It also appears that the choice of finance company appears to be continually diminishing. The good news is that XL Business Finance has the expertise and experience to source hire purchase and finance lease facilities from a variety of lesser know finance house and independent companies.

In addition even if the bank are offering a facility it is advisable to consider an alternative  hire purchase or finance lease deal provided by a third party funder. The banks tend to offer funding by way of a commercial loan. As they will probably not secure the loan against the equipment itself they will only lend against the strength of the balance sheet or the amount of available security. This may have implications for raising finance at future dates as valuable funding lines may have been exhausted. Therefore if the equipment to be purchased has some value, it is Durable, Identifiable and Moveable than it maybe possible to organise third party funding

XL Business Finance has many years experience in arranging lease facilities for all kind of things including, computers, printers, office furniture, racking are but to name a few

hire purchase fixed or variable rate?

Saturday, May 15th, 2010

We have come across a very interesting scenario in the last week or so whereby another broker had bee quoting a very very cheap rate on a hire purchase deal. Not wishing to criticise my fellow broking colleagues I suggested to the customer that maybe  not all is at it should be.

 Most finance companies have the same funding costs and they have the ability to link it to fixed rates or variable rates. At the time of writing this article the cost of fixed funds for most finance companies is around 4.o%. I would suggest that a margin of 2.5-3% would be a fair return giving a nominal rate to the customer of about 6.5-7%. Therefore when a customer was being quoted 5.5% on a hire purchase deal one can only deduce that the broker was about to sign the deal up on a variable rate. Most finance companies on a variable are taking a min base rate of around 3% so this would seem to stack up.

At a time when interest rates are really low it would make sense to go for the slightly more expensive fixed rate because rates are only going to go up but maybe not in the immediate future. At the end of the day it must b the customers choice and as such the customer must be aware as to what he is signing up for. As provision of  hire purchase or finance lease to business users is totally unregulated the end user must be aware that even a written quote may not contain this vital information

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

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!

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!

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