Business Finance Brokers

This is a person or company whose role is to assist their clients in the purchase of assets from their selected supplier by finding the right lender to borrow from to suit their needs.
It is best to ensure this is a reputable lender for your requirements. Check their FCA permissions and/or membership to a professional body, such the NACFB (National Association of Commercial Finance Brokers).

Asset Finance is very often associated with the purchase of equipment (or things of a similar high cost) for a business. In other cases, a business can use assets they own – such as plant, machinery or vehicles – as security against a loan from an asset finance provider, known as refinance.

The finance company will pay the supplier for the equipment, plant, vehicle or machinery and the client will pay a regular sum (monthly or quarterly) to the provider. The item may eventually become the property of the business over time, depending on the sort of asset finance involved.

Generally, asset finance providers will consider a wide range of high-value items – both for purchase and leasing or borrowing against.

However, these assets must meet the DIMS criteria. That is to say that the assets in question are:

• Durable
• Identifiable
• Moveable
• Saleable

This can include vehicles, plant, machinery, IT hardware and software, printers, LED lighting, etc. Even livestock can be purchased on asset finance!

As a rule of thumb, asset finance becomes better value if the asset is over £10,000, but lower value assets can also be financed on asset finance.

There are a range of property finance options available for investors, developers and landlords to access, generally secured against the property and/or land: 

• Commercial mortgages
• Auction finance
• Bridging finance or development finance

Property finance for developments are generally short term loans to cover the costs of converting an existing property or developing land into flats, houses in multiple occupation (HMOs), or alternate uses. It is normally advanced as a loan, secured against that property or land asset.

Either the property is being purchased as an investment and will ultimately be let, or it is ‘owner occupied’, when the business trades from that address. Different lenders offer different terms depending on the circumstances.

Principally it works in the same way as a private mortgage to finance the cost of a large purchase.

Auctions can be a quick way to get a property at a discounted price, but you need to have the capital to hand to finance the full deal. There are lenders who specialise in finance for property purchases at auction.

Rates tend to be lower when the property is used as security, so a commercial mortgage tends to offer lower interest rates than a business loan and is usually seen to be the best route to finance commercial property.

All successful property developers are good planners and getting the right finance in place is a crucial ingredient in development success. Finance for property development is a complex area and one of the first steps in determining the type of finance needed is to assess how extensive the project is, how long it will take, and how much it is likely to cost — in both the best- and worst-case scenario. The type of loan you get will depend on what you need the funds for.
If you've got the right exit strategy in place and the lender deems you eligible, you can get a loan for property development.

A cashflow forecast is a plan that shows how much money you expect your business to receive and pay out over a set period of time. It can help you plan how much you expect to make in sales and spend in costs.

Financing a new business can be difficult to source. Lenders want to see the confidence of the business owner in their new enterprise and expect to see personal financial investment in the new initiative – this underlines your commitment.

Not all banks provide finance for new businesses, which can include a business trading for less than 24 months. You will need a business plan and cashflow forecast for your new enterprise. You are also likely to need to provide details of your personal financial position, eg Assets/Liabilities/Income/Expenditure form and personal bank statements. Check your personal credit report to ensure it won’t impact you personally.

Draw up a budget based on your business plan, including forecasts for sales and expenditure, and what your cash position will be each month. Do include capital costs, such as purchasing equipment, and most importantly: be realistic. Plan for sales being lower and later than you hope, getting paid may take longer and costs can be higher. And don’t forget VAT!

1. Investment – this could be yourself, friends and family or other outside investors. It will be difficult to borrow money from a bank unless you have invested enough of your own money in the business. Showing that you are personally invested underlines your commitment.

2. Short term lending – In the early days, your bank overdraft is a good source to fund working capital. Your bank may also provide a business credit card – speak to them about options. Invoice finance may be a route to explore too.

3. Long term lending – Business loans and secured finance is usually the best way to finance equipment, vehicles and other long-term borrowing requirements. Asset finance may allow you to raise more money than a loan.

4. Grants – Check if you are eligible for any financial support through grants and other schemes. There are regional and central schemes available, some of which are sector specific. Areas such as exporting, technology and training are often targeted for support. Check what is available before you start trading or make purchases as grants cannot usually be awarded retrospectively.

However, these assets must meet the DIMS criteria. That is to say that the assets in question are:
• Durable
• Identifiable
• Moveable
• Saleable

This can include vehicles, plant, machinery, IT hardware and software, printers, LED lighting, etc. Even livestock can be purchased on asset finance!
As a rule of thumb, asset finance becomes better value if the asset is over £10,000, but lower value assets can also be financed on asset finance.