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Apr 25

Spring Newsletter

Posted: 25 April 2017 by Affinity

Further to our communication at the end of last year we have seen a marked increase in business levels across the board. Typically, the early months of the year are slow to gather pace in our arena, however this year and January in particular exceeded all our expectations.

The diversity of assets we finance keeps expanding whether it’s printing equipment, vans, cars, minibuses, IT equipment or machinery we have covered practically anything a business can buy in the first quarter of 2017.

As we all know ‘Brexit’ created initial economic uncertainty and an element of disbelief. However, on speaking with our customers there is a bullish atmosphere about their business growth plans. In particular, now Article 50 has been triggered it has started to feel more ‘real’ and the majority of clients have expressed a satisfaction that the process has begun.

The Asset Finance sector has witnessed a steep increase in new funders to the marketplace over the last 12 months, therefore we now have access to over 50 different types of lenders. Asset backed lending has proven to be a significant alternative to traditional bank lending in recent years, with our funders taking a commercial view on every deal they underwrite. As a result, the types of facilities can be totally bespoke and decisions are based on the merits of each individual business. It is important to assess a deal based on all contributing factors, noting that each business is very different. Thus, providing flexibility and a variety of options compared to a blanket approach applied by some high street lenders.

Spring Budget Highlights

Growth Forecasts The Office for Budget Responsibility expects the economy to be the same size in 2021 as before, but the growth will better in the near term and worse later on.
Dividend Tax Company Directors and private Shareholders will have their tax-free allowance on dividends cut from £5,000 to £2,000 from April 2018.
National Insurance Contributions An increase in class 4 NIC paid by self-employed workers with profits of more than £8,060 a year to 11% by 2019.
Small Businesses Three measures to help small businesses facing the biggest increase in rates…
1). Any business coming out of small business rate relief will not see their bill increase by more than £50pm and subsequent increases will be capped.
2). A £1,000 discount for all pubs with a rateable value of less than £100,000.
3). Local authorities will be given a £300M fund to deliver discretionary relief for ‘individual hard cases.’

Deal Summary

Established Nottingham print company acquires UK’s best stitching machine…

We have a relationship spanning over 10 years with our client, who are an established Nottingham based print company, boasting an enviable reputation within their industry. They have the very latest in print technology at their fingertips and the machinery to support large blue chip clients.

Affinity were approached in January to secure funding for a new stitching machine. This was a unique opportunity to acquire the only machine available in the country directly from the manufacturer as market demand was rapidly exceeding supply. Their existing machine was slowing down production capabilities, therefore speed of turnaround was key to help meet their requirements.

The £190K + VAT facility was approved over 7 years within a couple of hours and the overall deal completed within the required timescale. Our customer was delighted to have acquired the best machine in the UK and at such competitive rates. We will continue to support the business with all their asset finance requirements due to our strong relationship and excellent service levels.

Re-finance for Nottingham business provides efficient cash-flow benefit…

We have known the above business for several years and have a close relationship with the Directors. As an established growing business, it is important for them to have access to a variety of funding channels, rather than just their main bankers.

They wanted to make some improvements to their premises, which involved renovating one of their large warehouses and under-cover dismantling areas within their 24 acre site.

As the need was less specific than just buying an asset, the business required a lump sum cash amount, providing flexibility when sourcing suppliers. The bank would have been more than supportive, however they feared the time taken for them to react and gain approval would have been too onerous. Therefore, once approached we utilised 5 unencumbered cranes on site and re-financed an amount of £350K. Whilst the crane values were slightly adrift of this figure, our funder was totally comfortable with the strength of the business and rationale. As a result, they actually lent 110% of the crane value, providing a bespoke deal which completed within a week.

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