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If you work in financial services, banking etc then you probably know the answer to this. Many in the industry assume that customers know what it is as well. Close Brothers have been conducting a quarterly survey for a number of years where they ask SMEs “Have you heard of Asset Finance?”. If you look back as far as 2013, the percentage responding positively to this question has consistently only hung around the 40% mark! “Asset Finance” is a collective term used to describe Hire Purchase & Leasing products for businesses. It is one of the most common forms of external finance used by SMEs and is frequently used by larger business as well. Asset Finance products allow business access to equipment, vehicles, plant, machinery etc which they may not be able to afford due to a lack of cash flow. They usually involve paying a monthly charge (repayment) for use of an asset over an agreed period of time, therefore avoiding the full cost of buying it outright. Assets financed in this way can vary from small to large. It could be a photocopier or coffee machine through to vehicles, heavy plant, marine vessels and aircraft. Common examples of Asset Finance products are:- Hire Purchase (HP): allows the customer to buy the equipment on credit. The finance company purchases the asset on behalf of the customer and owns the asset until the final instalment is paid, when ownership transfers. Finance Lease: The full value of the equipment is repaid to the finance company, plus interest, over the lease period. At the end of the term, the company can choose to: return it continue to use the asset by entering a secondary rental period sell the asset and keep a portion of the income from the sale Operating Lease: Similar to a Finance Lease, an Operating Lease allows the business to rent the asset from the finance company while they need it. The key difference between the two is that an Operating Lease is only for part of the asset’s useful life. This means the business pays a reduced rental because the cost is based on the difference between the asset’s original purchase price and its residual value at the end of the agreement. It is also possible to refinance assets that a business already owns. This is often referred to “Sale & Hire Purchase back”. Here the finance company purchases the asset from the business, releasing the funds back to help the business’ cash flow. The funds raised will vary depending on the type, age and value of the assets involved. At the end of the finance term, ownership of the assets returns to the business. What benefits does a business get from using Asset Finance? They give businesses access to the equipment they need without incurring the cash flow disadvantage of an outright purchase, this means business has access to the latest equipment which may be more efficient than older equipment. Finance agreements can often be tailored to the business’ needs, with flexibility on both the term and repayment schedule Leasing and HP are excellent budgeting tools as payments are usually fixed,

This is a very good question. In the past, if a business wanted to borrow money, they would visit their local Bank Manager. The Manager would know the business and sit down with the owner and discuss what funding was required. Today, your traditional High Street Bank has far fewer branches. According to Which?, in a recent report they stated that 3,303 branches closed their doors in the period from January 2015 to August 2019. It can also be difficult to get to the Relationship Manager responsible for your business (assuming you even have one) and it is not uncommon for these Relationship Mangers to change all too frequently in the eyes of the customer. Furthermore, lending criteria has become more stringent in general on the High Street and there has been an influx of new Challenger Banks, Alternative Funding Providers & Specialist Lenders, some of whom have no branch presence. So how do you know where to start? This is where a Commercial Finance Broker can step in. Expertise A Commercial & Asset Finance Broker such as Lochend Finance has years of experience in Banking & Financial Services. They are experts in finding the right financial solution for your business. They operate every hour of every day in the financial services market place. As a business owner, you are an expert in running your business. Business owners, in all probability, will not have the up to date knowledge in terms of product availability, rates etc. Will they know which lenders have an appetite to lend to their sector and for the purpose they wish to borrow funds? Who can lend the money in the required timeframe? Do Business Owners have the time to search the market for the best service, rates, terms & conditions? Your Commercial & Asset Finance Specialist will do that for you. As a trusted advisor, they will search the market place and bring you the best solutions from well over 250 lenders. Does using a broker guarantee I will get my loan? The short answer is no. Success or otherwise will depend in the merits of your proposition. However, your chances of securing the funds you need may well be significantly improved by using the experience of your Commercial & Asset Finance Broker. What factors do lenders consider? There are too many to list and some may be somewhat confidential to the specific lender. However, here are a few points to consider:- Lenders will expect borrowers to demonstrate how they plan to repay the loan. Will this be cash / profit generated from trading? In Property Development, it might be the sale of a property on completion. Are you borrowing to rent commercial or residential property? If so, does the rental income more than cover the loan repayments with a suitable buffer Credit history. The cleaner the credit history of the Business / Directors, typically the wider the choice of lenders that are likely to be available Loan purpose – it has to be legal for one! What are you going to do with the funds? Sector – most lenders willingness to lend will be

We are pleased to announce our new website launch and will be adding articles on a regular basis based on mortgage and protection advice, current financial issues and topics of relevant interest.