Category: Asset Based Lending Record (page 2 of 2)

Is It Possible to Get a Business Loan with Bad Credit?

20th October 2018 / admin / Comments Off

Often one of the biggest barriers to small business and start up founders getting a business loan is a poor credit rating. So, if you have been turned down for a loan because you have bad credit let’s look into ways it may be possible to gain funding for your business even if you have a bad credit rating.

Find out why you have a bad credit record
Review your credit score online and find out what may be causing the problem. A poor credit score can come as a surprise and the first thing you know about it is when you are refused a loan. Sometimes the cause can be rectified if for example there are some discrepancies in addresses, your name isn’t on the electoral roll or if you have missed credit card payments.

Research lenders willing to provide loans to people with below average credit scores
Some lenders will consider business owners with below average credit scores so it is worth doing some research to find them. If your credit score is below 500 this can start to make life difficult and lenders willing to take the risk on you will become harder to find the lower your score is.

Look to alternative sources of finance that won’t require a good credit score
You may find there are plenty of alternatives available when it comes to finding funding for your business. Friends and family might be one avenue if they are understanding and supportive or asset finance could be an option.

Work to improve your credit score
Your credit score isn’t set in stone and it can improve significantly if you pay all your bills on time and avoid running up debts. Taking out smaller loans and using a credit can actually help improve your rating if you are sensible about making more than the recommended monthly repayments.

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.

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.

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.

Is Asset Finance An Option For Startups?

11th April 2017 / admin / Comments Off

Asset finance is often seen as something a more mature business might consider when they are looking to grow and expand, however it can be just as useful for a startup needing that extra boost to get things off the ground.

Another reason asset finance can be good for a startup is the relative ease with which it can be sourced compared to raising money from other sources. Raising money from the bank for an unproven startup can be a difficult task yet there is still that need to establish a solid financial platform to enable the business to survive.

Asset finance is available in many forms including leasing hire purchase, refinance and specialist funding. What all these different forms of asset finance have in common is they protect your cashflow.

Lack of cashflow coupled with unmanageable debt is a recipe for disaster in a business and if you have a business that may rely on one or two big clients, then you may be vulnerable if one or both decides to pull the plug.

Asset finance will at least enable you to spread the cost of borrowing over a longer period to protect your cashflow and continue to grow your business.

5 Steps To Producing An Accurate Forecast For Your Business

13th January 2017 / admin / Comments Off

Regardless of how large or small your business is, accurate forecasting for the year ahead is critical to maintaining healthy cash flow. Reduced cash flow is the most common reason for business failure, so being realistic about the sales you expect to make and the profit that will be generated from these sales is vital.

Here are our top tips on producing an accurate forecast.

Be realistic
Many business owners find themselves living in a fantasy world when it comes to forecasting. They only consider the best case scenario when investing in new ventures for example and fail to consider what happens if that venture fails to make a profit. Business costs can certainly rocket and there is often no guarantee that doubling advertising spend will lead to a doubling of sales.

Consider possible economic impacts
This year we are more likely to see inflation rise due to the falling value of the pound against other major currencies as well as the start of Britain’s exit from the EU. Ensure that your business is prepared for any shocks that might come in the next 12 months.

Consider seasonal demand fluctuations
If for example you own a retail business that sells winter sports equipment, then your busiest times of the year are unlikely to be the summer months. Take into account seasonal demand with your seasonal forecasting if your business relies on it.

Make sure you differentiate between the income your make and your costs
Not every business gets paid monthly, sometimes payment terms may be up to 90 days which means a long wait for money. The opposite may be true if you purchase equipment for your business on credit and the bill doesn’t arrive until the following month, putting your business under possible financial pressure.

Consider asset finance for your business
Asset finance can help you boost cash flow at vital times and ensure your forecasting remains positive for the year ahead.

How Asset Finance Can Stop Your Business Falling Behind

7th November 2016 / admin / Comments Off

If you want to win in business the most important thing to do is stay in the race.

You hear this all the time from football managers who are under pressure to bring home league titles. Winning is always a case of staying in the race whether that is in the lead or at least keeping in touch with the leaders.

This is sometimes hard to achieve for smaller businesses that lack sufficient cash to purchase the latest equipment they need to compete on a level playing field. The harsh reality is that businesses that have the resources will simply mop up all the available clients if they are able to provide a faster and more efficient service.

The key thing from a business point of view then is to continuously invest in new equipment. However rather than commit lots of cash up front and put your business operations at risk, asset finance is a way to fund the growth of your business without digging deep into your working capital.

Asset finance can be a flexible and reliable way to help you achieve your business objectives without making a huge sacrifice. If you would like to talk over your options with us we will be more than happy to help advise on how asset finance can work for your business.

What is the Annual Investment Allowance?

11th October 2016 / admin / Comments Off

Our clients often ask us what Annual Investment Allowance (AIA) is and why it’s important when we first have a discussion about asset finance. Here’s a brief guide to what it is and how it can help.

AIA is actually a type of tax allowance to encourage businesses of all sizes to invest in new or used plant and machinery to help them grow. The 100% allowance applies to expenditure up to £200,000 during the year of purchase.

This acts as a great incentive for business owners who may be considering investing in say new machinery to improve productivity. However, there are exceptions that are not included in the allowance including land buildings and cars.

If you are keen to grow your business we can advise you on all sorts of ways to use asset finance to achieve your growth ambitions. We can also advise on the likely tax implications and perhaps reveal some allowances you may not have been previously aware of.

Every business situation is unique and the process depends on whether you intend to buy or lease and the amount of finance you need. Asset finance can be used to acquire a new fleet of vehicles or upgrade your IT systems. Whatever your requirements, our advisors will be happy to talk to you.

Asset Finance News You Might Have Missed Over The Holidays

12th September 2016 / admin / Comments Off

August is a usually one of the quitter months in the business calendar, however this year there have been a few things happening in the UK asset finance industry you may not be aware of.

Far from taking it easy over the holidays industry regulators have been busy finalising reports and consultations which will have implications for the asset finance industry.

One important announcement came from the Bank of England which announced that it would introduce a new scheme to replace Funding for Lending. The new scheme called Term Funding Scheme will involve lending money to banks on the understanding that banks will continue to up their lending to businesses and households.

Post-Brexit, the economy needs all the help it can get to try and stave off a slide into recession as uncertainty over the UK’s trade relationship with Europe continues. While the fuss over Brexit seemed to have died down a little in August as everyone waits to see what the outcome will be, this may well be the calm before a storm that is likely to be felt in all areas of the economy.

One other piece of news was a HMRC proposal to scrap certain salary sacrifice tax benefits which includes the possibility that car salary sacrifice benefits may be withdrawn.

Benefits gained from pension saving, childcare and the Cycle to Work scheme will remain eligible under the new proposals.

What Type Of Asset Finance Is Right For Your Business?

11th August 2016 / admin / Comments Off

Asset finance is an umbrella term that covers a variety of options for businesses that need to protect cash flow or find ways to buy new equipment and machinery without the high initial costs. So what are the options for businesses and which one is most likely to suit you?

HP or lease purchase
If your aim is to buy equipment for your business and eventually own it outright, then HP or lease purchase is a good option. You will be able to pay off the cost either in lump sums or structure repayments to suit your cash flow.

Finance lease
If ownership of equipment or machinery is less of a concern then finance leasing gives you the option to rent it for an agreed period. With this option you can offset your rental payments against your tax liability and less of your money will be committed up front protecting your vital cash flow.

Sale and leaseback
This option allows you to release money tied up in assets. This cash can then be put back into the business.

Operating lease
You may require specialist equipment only for a short period to satisfy the needs of a short term contract for example. In this case an operating lease offers flexibility and you can rent equipment for the period where your business needs it.

Contract hire
This is one way to avoid the costs of owning depreciating assets.

Contract purchase
This works in a similar way to hire purchase but you won’t be required to take the option of ownership at the end of the agreement.

Brexit Increases the Importance of Asset Finance to Businesses

11th July 2016 / admin / Comments Off

The asset based finance industry has been growing at an impressive rate in recent years and Brexit will do little to put the brakes on that growth as uncertainty about the economy weighs heavy on business owners’ minds.

It is now more important than ever that businesses plan finances in preparation for an uncertain future. It is also understandable that many will be cutting back on investment in new staff and acquisitions until the impact of Brexit on the economy becomes a bit more clear.

The immediate impact of Brexit on businesses is for now confined to sentiment. This sentiment may well snowball into a new recession that affects everyone. If one business reduces its investment, then it is inevitable that suppliers will be affected.

For cautious business owners, now may be a good time to look at asset based finance which can help fund new equipment purchases when liquidity needs to be preserved.

The costs for businesses that buy raw materials outside the UK will find that their margins will become more and more squeezed with each drop in the value of sterling. While the pound’s fall in value will benefit exports, it will also push up inflation. Let’s keep our fingers crossed that it will all turn out okay in the end!

Vets Equipment Finance

5th May 2016 / admin / Comments Off

If you run a veterinary practice today, you will need all kinds of equipment to ensure that things run smoothly and efficiently in addition to ensuring the best standards of care.

Of course all the equipment you need these days doesn’t come cheap, which is why finding ways to finance your assets can be helpful if not essential. The great thing about asset finance for vets is, you can use it not only for large expensive items of machinery such as x-ray processors but also smaller items such as thermometers and other equipment you might use every day.

Breaking it down in simple terms, there are two main asset finance options for vets. These are leasing and hire purchase.

If you want to keep costs down, leasing can often be the better option and even more so if your needs are short term. Your monthly costs will be less because you aren’t buying your equipment and at the end of the agreement you can simply return it or renew the lease. Your approval rate on leasing will also be higher than for higher purchase.

With higher purchase on the other hand you will eventually own an asset permanently although you will need a higher deposit and the monthly payments are likely to be more. Again approval rates are high for asset finance lending on equipment bought on higher purchase as long as your credit rating is good.

New Business Asset Finance Expected To Grow 10% in 2014

14th January 2016 / admin / Comments Off

The Finance & Leasing Association (FLA) has revealed statistics showing that the asset finance industry has grown for the 25th consecutive month. As a result of this and current market conditions the industry expects further growth of 10% in new business asset finance in 2016.

According to the latest figures from the FLA asset finance relating to new business saw an increase of 3% in October 2015 compared to the October 2014. This represented a total of £2.51bn overall. Car finance was by the far the biggest growth area in leasing with 6% year on year growth recorded followed by IT equipment finance (2%) and plant and machinery accounting for 1%.

IT equipment finance was worth a total of £170m in the 12 months to October 2015 while car leasing finance represented £864m.

The one area that bucked the positive trend was business equipment finance which saw a negative year on year trend, falling by 12%. This meant that the sector was worth £159m overall.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “October saw continued growth across most of the main asset finance sectors, although the slowdown in emerging markets in recent months and falls in commodity prices have hit demand for construction and agricultural equipment finance.”

Record Number Of Firms Using Assets To Raise Cash

6th October 2015 / admin / Comments Off

According to new data released by the Asset Based Finance Association (ABFA) a record number of businesses are now using assets to raise cash.

The assets typically used by businesses to raise money include plant, machinery and real estate as firms are increasingly seeking better alternatives to bank loans and overdrafts. Funding that is secured against assets offers businesses an opportunity to borrow money at a cheaper rate because lending is secured. Assets can either be physical or loans can be secured against the outstanding debts owed to a business.

A total of £4.2bn was secured against assets by businesses in the UK, which represents a 9% increase on the £3.8bn recorded in 2014. The overall amount of funding secured by businesses through asset based financing stood at 19.3bn to the end of June 2015.

The figures indicate that businesses are embracing this innovative form of financing rather than relying on other more expensive and less secure forms of lending. While asset based finance can be used to help businesses that may be struggling with cash flow issues, it is also being used as a positive means of driving investment in future growth.

Asset based finance is not just restricted to areas such as real estate, plant and machinery it can also be used to borrow against more unusual assets such as IP and forward income.

Asset Based Lending Record

26th August 2014 / admin / Comments Off

Small businesses fuel record level of asset based lending

A record £18.9bn was borrowed from asset-based lenders in the three months to the end of June, according to figures compiled by the sector’s trade body, highlighting the problems smaller businesses face in obtaining bank credit.

Demand for this sort of borrowing, most of which comes in the form of lending against unpaid invoices, has been fuelled by the problems small businesses face in accessing term loans and overdraft facilities from high street banks.

“We are seeing more and more businesses of all sizes and types taking advantage of invoice finance to fuel their growth, particularly as more traditional forms of lending remain subdued,” said Jeff Longhurst, chief executive of the Asset Based Finance Association, which compiled the figures.

“More businesses are viewing their invoices as what they are – one of their biggest assets.”

However, just under a third of the total was used by companies with an annual turnover greater than £100m according to the ABFA.

The total amount of invoice finance and asset based lending rose by seven per cent during the second quarter of the year, up from £17.7bn in the previous three months, and 10 per cent more than the year to June.

Four-fifths of asset-based finance is invoice finance while the other 20 per cent is lending secured against assets, including inventory, property and machinery.

Despite numerous schemes and near-constant political pressure for banks to improve access to finance for businesses, credit conditions remain tight in the UK.

Asset-based lending has been on an upward trajectory since 2009, during which time traditional lending has fallen by a fifth. But it is still a small percentage of the total borrowing by businesses in the UK, which stands at £384bn.

Its growth has also been insufficient to fill the decline in traditional bank lending, which stood at $492bn in June 2009.

“Asset-based finance is a proven tool for growth, enabling companies to increase their funding as they grow,” said Mr Longhurst.

“What’s becoming increasingly clear is that asset-based finance such as invoice finance in particular, is the alternative to traditional lending for SMEs that the Bank of England and the Treasury have been looking for.”

[FT]