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Guide To Start-up Loans

21st September 2018 / admin / Comments Off

What is a start-up loan? How does a start-up loan differ from a conventional loan if at all? Find out more in this short guide to start-up loans.

What Is A Start-Up Loan?
There are many different types of loans an load products on the market which can be used by start-up founders to fund their business. A start-up loan however is a traditional type of loan from a traditional lender however there are different types of loan available depending on the needs and financial position of the business. Start-up loans are not to be confused with other newer forms of loans such as crowd funding.

What are the various types of start-up loan?
One of the more popular types of loan for a startup is a line of credit. This essentially works in much the same way as a credit card. A set amount of money is available to the business owners to use when they need it. Agreements are often interest free to begin with but can come with a sting in the tail when this period is up and interest becomes chargeable.

Equipment financing is a type of loan that allows a business to purchase the equipment it needs to function with the loan used as collateral. This type of loan is usually available at a lower interest rate than many alternative types of loans. The purchase can then be paid off as the business hopefully gorws and starts generating income. The depreciation of equipment can also be offset against tax which is another benefit of this type of loan.

The great benefit of this loan is that rather than fronting the cost of equipment before your business opens, you are able to pay off the cost as your business grows and makes money.

Comparing Business Finance Options

12th September 2018 / admin / Comments Off

If you are looking to grow your small business then the chances are you may need funding to help you achieve those ambitions. Navigating the various options to you, however, is not a straightforward task.

It often helps to first establish what sort of funding is right for your business. There is no one size fits all form of finance and all of them will have advantages and disadvantages depending on the nature of your business needs.

If for example your business is lacking the equipment needed to grow such as needing to invest in machinery but not having sufficient funds to do so, then asset finance is likely to be the better option.

In other cases invoice finance may be the better option if cashflow is an issue and you need faster access to working capital.

Some business owners who are not aware of the above may opt for a loan from a bank or other lender which is then paid back over a fixed term.

Less commonly a business angel may be a source of funding but this could come with the drawback of having to give away a percentage of your business in return for the money.

Whichever funding option you go for, it is important to make sure you read the small print and understand what you are agreeing to. Where possible seek expert advice before deciding on which option is best.

Businesses Turned Down For Business Loans Secure £15m of Funding

5th September 2018 / admin / Comments Off

While securing a loan for a mature business in good health is relatively straightforward, for smaller businesses and start ups going to the bank for a business loan can often end in rejection and disappointment.

In the past this would usually lead to business owners giving up on their growth and expansion plans unaware there might be alternative sources of funding readily available. This is why the government came up with a scheme that referred those businesses that were turned down for a bank loan to smaller lenders or companies offering alternative sources of finance such as asset finance.

The referral scheme was introduced in November 2016 and according to the government it has been successful in sourcing £15 million of funding for small business with loans ranging from £100 to £1.3 million.

Such is the demand for funding in the small business sector, the amount loaned via the referral scheme quadrupled in its second year with 670 businesses benefitting from the extra funding in the last 12 months alone.

These results while amounting to a small proportion of the amount of money being lent to businesses each year show just how many businesses might not have received the vital funding they needed to develop.

Are UK Businesses Shrugging Off Brexit Uncertainty?

21st August 2018 / admin / Comments Off

It would appear so according to some statistics released in the past month, however measures of sentiment vary.

While the past month cannot be seen as a crisis for the UK’s Brexit plans, it has at times been close to one. Despite all the uncertainty about whether the UK is going to crash out with no deal or not, the economy has continued to be coping well and carrying on in an upward trajectory.

Business confidence according to Lloyds Bank is at its highest level since the referendum with 25% of SME businesses feeling confident about sales orders and profits. This marked a rise of 2% on the 23% recorded in January 2018.

When it comes to investment, however, the results are not so clear with some data showing that the number of firms not planning to invest in the next 6 months rising by 10% this quarter.

While many business owners and politicians will be thinking more about their holidays than business this month, it could be the calm before the storm when we are set to see negotiations begin again in the autumn.

Those leading the Brexit negotiations will continue to walk a precarious tight rope to protect the interests of business and its people.

Common Questions About Asset Finance Answered

20th June 2018 / admin / Comments Off

Asset finance can be the key to achieving real growth in your business particularly when you need a flexible way to raise finance while protecting your cashflow at the same time. Here are some answers to some of the common questions we receive from business owners who ask about asset finance.

Why use asset finance instead of paying in full for the asset?
Like any other form of lending, asset finance gives you the flexibility to continue to invest in your business without using up all your capital. Paying in full means using up your cash which can leave your business vulnerable in a downturn.

How hard is it to get asset finance for my business?
An increasing number of businesses are benefiting from asset finance and it among one of the most accessible sources of funding out there. Compared to other alternative forms of finance for your business, asset finance can often be the best option.

What can I use asset finance for?
Asset finance is used to invest in equipment that is needed to improve areas such as productivity, and efficiency or to expand your business into new areas with investments in assets including machinery.

If you would like to find out how asset finance can help your business, give us a call. Our experts are happy to answer any of your questions

Two Thirds Of Asset Finance Brokers Say Brexit…

5th May 2018 / admin / Comments Off

…Has Had An Impact On Investment

The fuss over the UK’s exit from the EU may have died down in the popular consciousness as people have largely resigned themselves to the inevitable, but the fallout in the business world is still playing itself out. This has led to many asset finance brokers blaming Brexit for decisions among business owners to delay investments.

This was at least the findings of a survey by United Trust Bank. Despite a long term boom in asset finance lending as businesses become more aware of its benefits compared to traditional forms of lending, 67% of asset finance brokers have said Brexit has had an impact on investment decisions.

The problem is said to be particularly evident in the vehicle, plant and machinery sectors indicating a fall in confidence in businesses that are likely to be seeking investment in these areas of their businesses.

Just over one third of asset finance brokers 33% felt that the UK’s exit from the EU wasn’t having any negative impact.
Much of what plays out in the coming months will depend on what deal the country makes with the EU and for businesses, whether or not their operations will be affected by Brexit if their market is largely or wholly domestic.

Mixed Results For Asset Finance

26th April 2018 / admin / Comments Off

Following several consecutive months of growth, the latest figures released by the Finance and Leasing Association (FLA) reveal mixed news for the asset finance market in the 12 months to February 2018.

The two sectors that have performed strongly according to the latest data are Plant and Machinery Finance and IT equipment. The former saw a 5% increase in asset finance while the latter saw a 13% increase suggesting these sectors are more willing to explore alternative sources of finance in the current economic climate. The same can be said for the manufacturing and the agricultural and construction sectors.

Two sectors that have not performed well in the 12 months to February are commercial vehicle and surprisingly business equipment which had seen growth up until this point. Commercial vehicle finance saw a 5% drop while business equipment saw a 20% fall.

Despite these mixed results, the underlying health of the asset finance sector remains strong and continues to offer businesses a less risky alternative to banks loans and other traditional forms of lending.

If you would like to find out more information on how asset finance could help with your own business investment, contact us today for advice.

Small Businesses Moving Away From Bank Lending

22nd March 2018 / admin / Comments Off

According to a recent report in the Financial Times, small businesses are increasingly likely to be looking to specialist lenders they are finding online.

The article reports that the chief executive of the British Business Bank saw evidence that small business owners exercising all their options when it comes to lending which includes anything from asset finance to peer to peer lending and venture capital.

Fear of getting turned down by banks has been given as one of the main reasons for the movement towards alternative finance while the number of businesses applying for bank loans has remained flat.

As with retail, there is a quiet revolution taking place where business owners have followed consumers online and to what they perceive as better deals.

Taking on a business loan from a bank is seen as risky compared to asset finance, which is comparatively less risky and allows business owners to use their existing assets to free up cash or boost cash flow.

According to the recent report asset finance lending increased by 12% last year while peer to peer lending increased by 51%. Equity investments meanwhile increased by 79%.

If you would like to find out more about how asset finance can help your business, then give us a call today.

Business Confidence On The Rise

27th February 2018 / admin / Comments Off

Analysis from several financial services firms of business confidence levels points towards an improving picture. Businesses are said to be more optimistic about future growth although they are still cautious about the year ahead.

The rise in confidence levels at the start of this year brings a halt to months of decline and has perhaps been buoyed by news of a strengthening pound and the prospect of Brexit not being as bad for the economy as everyone expected.

While businesses have plans to invest in the future, it is also true that bank lending to businesses fell by £1bn during the month of December 2017. Loans to businesses in the SMEs sector saw a significant drop too falling at their fastest for three years.

Alternative finance, meanwhile, has been the sector to benefit from the continuing sense of caution with businesses reluctant to take on new debts to fund any expansion plans they may have.

Asset finance takes away some of the risk involved in borrowing from banks and allows a business to use its assets to access funding.

Business that rely on importing and exporting into the EU will be watching closely to see what happens over the next 12 months and it is unlikely the mood of caution will be lifted during this period.

Growing Asset Finance Sector Calls For Government Support

15th January 2018 / admin / Comments Off

Demand for asset finance in the UK reached record levels in 2017 and this has led to calls for the government to support the sector’s growth in 2018.

According to data released by UK Finance, asset based lending has increased by 4% in the UK to £214 billion. The figure was based on the first three quarters of 2017 and the final figure is set to be even higher that what is already a record. The value of total advances in the most recent quarter totalled £22 billion which marked a 13% year on year increase.

The export sector saw particularly strong growth with export invoice discounting facilities up 33% and export factoring up 11% in Q3 2017. This will undoubtedly have helped the UK export sector deal with increased demand as a result of the fall in the value of sterling.

The figures show the increasing appetite for asset finance among UK businesses many of which are still unaware of the benefits. Asset finance can help support growth and expansion by using existing assets freeing up vital cashflow without having to resort to bank lending.

The only difficulty is in unlocking the same benefits for smaller businesses. This requires the government to bring forward legislation to remove some of the hurdles faced.

Asset Finance For Small Business – What Are the Options?

18th December 2017 / admin / Comments Off

We often hear from small business owners who are unaware of their options when it comes to asset finance. This is understandable as awareness of asset finance as an alternative to bank loans is still low compared to traditional routes such as going to the bank.

Going to the bank for a business loan, however, can be a laborious process with the real possibility that you will be turned down if the bank feels your small business doesn’t fit strict criteria. Asset finance can offer an alternative in these cases if the business model is sound and your company already has assets which can be used as security.

With this in mind here are the main asset finance options:

Hire purchase
This involves purchasing an asset and spreading the payments over a period of time. The disadvantage is it means you will end up paying more for the asset.

Equipment leasing
This involves renting a vehicle such as a van or another piece of equipment important to the business. Again the cost of the equipment can be spread over a set period, sometimes with the option to buy at the end or continue paying monthly and upgrade to the latest vehicle or piece of equipment.

Asset refinance
This allows you to use your existing assets to raise cash. This usually comes in the form of a loan which releases equity from your asset. This is ideal if a business is rich in terms of assets but needs to protect cashflow. The downside is the lender can seize the asset if you don’t keep up the payments.

Is Now A Good Time To Invest In Your Business?

10th November 2017 / admin / Comments Off

As another year reaches a conclusion, you may be thinking about what the new year will bring as most business owners are. This coming year things are predicted to be less certain than they have been for several years so is now a good or bad to time to be thinking about investing?

A lot will depend on the sector your business operates in. Each sector will have its winners and losers as a result of Brexit but recent positive news coming from the manufacturing sector shows that there has been some benefit from the fall in the value of the pound.

This makes the UK’s exports cheaper and attracts higher levels of demand. The growth picture for the economy as a whole however is not quite so rosy with growth slowing down even though unemployment levels are at their lowest since the 1970s.

The conclusion to be drawn from all this is that we rarely see all the balls in alignment when it comes to economies so paying too much attention to bad news can discourage investment at just the time when it is needed.

Many people were predicting a slump following the results of the EU referendum but this hasn’t materialised – at least not to anything like the degree anticipated. If you are a business owner looking to play safe and invest, then asset finance may be the option to get the best of both worlds by protecting your cashflow and making the most of your assets to fund growth next year.

Increased Demand Predicted For UK Business Finance Scheme

10th October 2017 / admin / Comments Off

According to statistics 71% of business owners will only try one lender when seeking finance for their business. This means that many of those businesses could be missing out on potential sources of alternative finance.

A government scheme introduced in November last year hopes to solve this problem for business through a bank referral scheme. The scheme encourages banks to pass on the details of applicants who failed to secure funding to alternative providers.

This effectively gives those businesses a second chance to secure alternative finance and it appears a growing number of those businesses are benefiting as a result. More than 8,000 businesses were referred via the scheme in the first 9 months following its introduction. It has to be said, however, this still represents only a small minority of the 50,000 businesses turned down for loans each year in the UK.

The availability of finance for businesses to fund growth and expansion is extremely important to the UK economy and any initiative which provides more options to businesses to secure that funding can only be good news.
The key to the success of these schemes is awareness and by encouraging the banks themselves to help in the process, the whole process for SMEs is set to become a lot less daunting for SMEs.

Some SMEs Remain Cautious on Seeking Funding

12th September 2017 / admin / Comments Off

While the asset finance sector continues to grow as a source of funding for SMEs, businesses remain hesitant to take advantage of this and other funding options stifling their ability to grow.

This conclusion was drawn after one survey found that more than a third of SME business owners look to avoid borrowing money at any cost.

Asset finance for new business grew six percent year on year in the month of July in deals of up to 20 million. Overall, however, new business fell when higher value deals were taken into account indicating the reluctance to borrow mainly affects the owners of businesses in need of higher than average levels of funding.

The figures released by the Finance & Leasing Association (FLA) did report a more positive trend on the plant and machinery sector with new business rising 20% year on year in the month of July.

The findings show that asset finance remains a vital part of the funding needed to support businesses and in turn the UK economy. The British Chamber of Commerce this month painted a gloomy picture of the UK’s economic prospects Vs the Eurozone.

This only increases the importance of the contribution made by the asset finance industry to future prosperity following Brexit.

SME Business Savings Fall

12th August 2017 / admin / Comments Off

SME business savings have fallen overall according to a recent study, however some sectors have seen savings increase.

Ahead of economic uncertainty and news that house price growth is stalling around the UK, it is perhaps surprising to hear that businesses are putting away less in business savings accounts.

Compared to last year, SME businesses are putting away 20% less over all according to research from the Hampshire Trust Bank. The average amount held in savings accounts by SMEs is currently £446,000 which is some way below the £556,000 recorded in 2016.

So is it a case of businesses digging into their savings more this year? There was nothing highlighted to suggest this was the case and in the IT and communications sector the opposite was true and firms were putting more away in savings with an increase of 5% overall on 2016. This was however the exception with charities and accountancy firms having 39% and 69% less held in savings respectively.

IT firms were said to be building average cash buffers of £843,000 putting among the biggest savers of all SME businesses.

The study indicates the need for business owners to understand the importance of protecting their businesses against economic uncertainty but it is also important to ensure that the best returns are made on those savings by shopping around for the best rates.