Apr 26

Spring Newsletter

Posted: 26 April 2018 by admin

The first quarter of the year has flown by and our deal count in 2018 has already reached over 100. Although we anticipated a slow start to the year, the influx of deals has been constant and varied. The need for capital equipment amongst businesses of every sector is more apparent than ever, as contracts continue to be won and growth plans are put into action.

As a business, we have also grown by a further 10% in our last financial year, continuing to support our customers with all types of funding requirements. As we move into our 9th year of trading, we genuinely feel proud to have supported so many businesses. We’ve achieved what we set out to do, provide excellent services levels, establish robust relationships and combine speed with easy access to funding.

As an established brokerage, our panel of lenders continues to grow, providing a varied range of products to suit any funding requirement our customers may need. In addition to the traditional facilities available, we have summarised below some useful options available, that you may not be aware of:

Funding VAT

We are always proud to offer our customers ever enhancing products and services from our extensive panel of lenders. One of our most competitive and flexible funders enhanced their already strong product offering by giving customers the option to fund the full VAT over the term of the finance agreement. This has been a very popular option, in particular where our clients have an immediate and urgent need to invest in new plant and equipment to support new contracts. Outlay at these times is significant as deposits are typically 5 – 10% plus all the VAT and the option to fund all the VAT over the term allows our customers to have a helpful injection of capital at the point it’s needed.

Enterprise Funding Grant (EFG)

We have the first Asset Finance provider to be approved for the British Business Bank Enterprise Finance Guarantee (EFG) scheme on our panel. Facilitating lending to smaller businesses that are viable but unable to obtain finance due to having insufficient security to meet a lender’s normal requirements, the EFG provides the funder with a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘declined’ credit decision to become an ‘approved’ one.

An example of a client eligible for an EFG could be an engineering company trading 5 years which needs to acquire an asset costing £50,000 for their business to fulfil a new contract. The asset offers insufficient security throughout the life of the contract due to the bespoke nature of the build.

Some other recent examples eligible for the EFG were:

Used Machining Centre (£190k – Good Asset) – Recently Incorporated Business with modest Balance sheet;
Tower Crane (£240k – Poor value Asset) – 2 year old company;
Office Fit-out (£330k – Poor Value Asset) – Long established with strong balance sheet.

Please contact us to discuss any opportunities you feel meet the EFG’s eligibility.

Broker use continues to grow

The use of a Broker or Finance Intermediary, such as ourselves, continues to be the most efficient and effective way for businesses to access finance quickly. The major Banks ‘appetite’ to fund business asset purchases has continued to reduce over the last 10+ years, whilst the number of SME’s using a Broker has increased. Recent statistics provided by the Finance Leasing Association (FLA) reported that whilst the use of the major Banks has continued to reduce in the last 12 months, the use of a Broker to access finance has increased by 14%.

Deal Summary

Industry specialists improve manufacturing capabilities…

We were introduced to this client by a trusted Financial Consultant, whom we've worked with for several years. He is currently working alongside the MD of this business to help them grow and improve efficiencies. After a recent site move, they've now got the potential to increase capacity within the manufacturing facility.

The machine was an integral part of their growth plans, which will increase production speed, whilst also helping to gain new clients. The facility to purchase a new UCE Shadow Machine, which manufactures circuit boards, was approved by Affinity within 24 hours. Upon it's arrival from China, we quickly arranged payment to the supplier to ensure there was no additional downtime. The deal was structured over 5 years, with only 5% deposit and included a 3 month VAT deferral, to assist with cashflow pressure at the time. Needless to say, the client was delighted with the flexible and bespoke structure.

New contracts due to Carillion failure means urgent asset purchases…

Our client, an industrial, commercial and residential ground work business, had for a number of years been one of Carillion’s sub contractors. With Carillion’s recent failure, our client was in a position to tender for contracts directly and as a result were awarded all direct contractual work as well as an additional number of maintenance contracts. Although they had a significant fleet of plant and machinery, to fulfil this work they needed additional equipment quickly. We discussed their requirements and with the required typical deposits and 5 – 10% plus all the VAT we identified there would be an immediate pressure on cashflow. After discussions with one of our funders we structured a bespoke package meaning minimal deposits – typically 1 payment in advance and also secured VAT funding over the full finance term.

Once again, thank you to all our customers and introducers for your continued support and we look forward to speaking with you all soon.