While the ‘Beast from the East’ is causing chaos up and down the country, the effect it is having on SMEs could be quite considerable too; contracts may have been curtailed, deliveries delayed and projects postponed, which could have a significant effect on a business’s cashflow, further down the line.
Without wanting to labour the winter weather analogies too much – if you don’t want these issues to snowball, now is the time to act!
Because these consequences are from circumstances beyond our control, businesses may not want to risk being frozen out by their bank. Alternatively, they might not to to take on any additional debt by way of a loan to cover the loss or by extending their overdraft.
However, there is another funding option that won’t leave you as exposed (to the elements) as other routes to finance might – by unlocking the value in the equipment (and) or vehicles your company already has (while continuing to be able to use them).
This funding tool is known as asset refinance. How you use the funds is your call; it can be used to help businesses expand and grow, or facilitate an injection of working capital just when it’s needed. On the flip side, it can also provide a lifeline to businesses heading down a slippery slope…
Take for example a well-established family run engineering business that Praetura Asset Finance were asked to help towards the end of last year. Circumstances (beyond their control) had changed the way their sector operated, which with hindsight they realised they were slow to react to. This saw the business heading on a downward spiral, compounded with contractual delays and financial mismanagement, the business had been left on the brink of administration.
However, following a management buy-out, a corner had been turned and the company’s future was looking positive. Until another major obstacle was placed in their way, when one of their funders decided to foreclose, giving them just 30 days to settle the debt. If the debt couldn’t be settled then vital assets would be repossessed. This in turn would force the company to fold with the loss of at least 20 jobs.
From a credit perspective, if we based our decisions on a tick-box credit scoring mentality (as many of the high street banks and big finance houses do), it would have been a non-starter.
But a consultant-lender (like Praetura), takes a different view where the necessity for a full understanding of the business comes first. Not just an understanding of what their immediate requirements are either, but their history and plans for the future too.
In this particular instance, our Credit Director and one of our Business Development Managers spent a morning with the client, so we could see the whole picture, enabling us to offer a solution that was best suited to that business and their particular circumstances.
Terms were agreed within 48 hours of the meeting: to refinance various pieces of engineering equipment over a 60 month term, providing £325,000 of funding. The deal was documented and paid out within seven days (24 hours before the repossession deadline).
Asset refinance: providing straight-forward and surprisingly speedy solutions for your business.
Now we’re not saying that the Siberian weather is going to leave businesses in such drastic straights. But we are suggesting that asset refinance can offer businesses help and assistance for a wide variety of circumstances in a relatively risk adverse way. You won’t be taking on any additional debt, instead you’ll be utilising something your business already has. Plus, if you have machinery or transport currently on lease or hire purchase agreements, asset refinance can be used to streamline the number of arrangements and reduce your monthly outgoings.
If the weather has affected your company’s cashflow, this could be the solution your business needs.
Perhaps now is the ideal time to find out more about the options that asset refinance can make possible?
For more information about how asset refinance could help your business, speak to your business finance adviser or local asset finance broker today.
If you want to talk directly to an independent asset finance lender to find out more, you are more than welcome to get in touch with our knowledgeable team by calling 0333 323 7830 or emailing firstname.lastname@example.org.