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Jul 18

Summer Newsletter

Posted: 18 July 2017 by Affinity

Since our last communication in Spring we have not only seen the continued ‘rumble’ surrounding Brexit but also the ‘snap’ Election in June. For some this was just another distraction from running their businesses across the Country and alike to Brexit the run up to the election created a ‘pause’ in growth plans and aspirations while they awaited the outcome. And, alike to Brexit once the results were out it was ‘business as usual’.

Everyone is now ‘back on the tools’ and focusing on their own responsibilities and growth and this is reflected in the business levels we are experiencing.

Market News – Finance & Leasing Association (FLA)

The latest figures released by the Finance & Leasing Association (FLA) show that asset finance new business (primarily leasing and hire purchase) grew in May by 16% compared with the same month last year. The plant and machinery finance and business equipment finance sectors reported new business up in May by 28% and 31% respectively, compared with the same month in 2016, while new finance for commercial vehicles was up by 3% over the same period.

Asset finance new business grew by 9% in the first five months of 2017, as the industry continued to help businesses invest. “The growth in plant and machinery finance new business so far in 2017 has been broad-based, with increases in new finance provided for construction equipment, agricultural equipment, forklift trucks, and production and process plant over that period.”

This growth in asset finance new business during the first quarter was above expectations, and reflects the improved outlook for business investment reported by the Bank Of England in its May 2017 inflation report.

'Affinity Asset Finance Ltd - proud to outperform reported market growth’

In the months of May, June and to date in July, we have written multiple finance deals comprising of all sorts of assets – high performance cars, CNC Machinery, minibuses, cars, light commercial vehicles…the list goes on and this is extremely encouraging as growth and investments continues.

Our own activity levels compare favourably against the already positive FLA commentary above. Their report stated that Asset Finance growth was 9% whereas we are proud to report a figure of 11% growth for the same period, a true reflection of our services levels and ever increasing market presence.Given this, we would like to reiterate why asset finance has experienced this constant growth. Compared to traditional financing methods, asset finance is bespoke as it is secured by a particular asset, whereas traditional banking is secured by way of personal guarantees.

Asset finance can often work out cheaper than other bank finance because it is secured by a specific asset and, generally speaking, the set up process is relatively straightforward and the credit process is quicker. Asset finance is not intrinsically complicated and should be kept that way, essentially clients just want to know what they are paying for and how it works.

One of the key advantages is that it gives businesses access to necessary equipment without incurring the cash flow disadvantage of an outright purchase. Businesses can also benefit from asset re-finance as it releases tied-up cash, minimises ownership risk, adds to the financial value of business assets and allows flexibility on both the terms and repayment schedule.

Proud to Sponsor the Start Trust Motoring Event

The Star Trust is an East Midlands-based charity, run by local business owners and entrepreneurs, which supports good causes across the region. Good causes such as The Children’s Bereavement Trust, Forever Stars, Beaumond House and many many others.
This year we were proud to be one the sponsors of the 2017 Motoring Event, an exciting course around the Peak District in a variety of high performance cars which raised over £56k, a fantastic achievement.The route map with the sponsors (including us) is attached and the link to this very worthwhile cause is below. https://www.star-trust.org.uk/

Deal Summary

Midlands based furniture manufacturer invests in new multi-needle stitching machine…

We were introduced to this client by a trusted source, who had a relationship with them spanning over 10 years.

They needed to acquire a new machine to enhance existing production capabilities by replacing an ageing machine. Initially, they had approached their existing bankers, who were more than supportive, however the client felt it was time to spread their exposure through a different lender.

The 143,500 Euro machine was being supplied by a Spanish manufacturer, who were willing to ship the goods based on deposit payment. Once arrived in the UK we acted quickly to reserve the Euros with our funder and provide an efficient service to ensure the balancing payment was made swiftly.

The agreement was structured over 5 years at an extremely competitive rate and completed within the tight deadline. This is a great example of a customer using standalone asset finance, rather than increasing the company’s exposure with their bankers. It provides flexibility by not impacting on bank appetite should they need additional borrowing for more traditional lending facilities going forward.

High net worth client acquires £265K collector’s item…

An existing client of ours who has held agreements for numerous high performance cars over the years approached us with a unique opportunity.

He had been offered a 2005 Mercedes McLaren SLR with low mileage and in immaculate condition. This was a rare opportunity to purchase a prestige car that would only appreciate in value! The deal was approved within a matter of hours and structured over 4 years with a sensible final balloon payment. The car will be put into his collection and rarely driven, in order to preserve its value and provide a great investment.

He was delighted with the competitive rate, structure and efficient service, allowing him to collect it before the weekend. We look forward to funding the next one!

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