Much is made about the benefits of asset finance allowing businesses to invest in new equipment or upgrade vehicles to enable growth. But what isn’t highlighted, perhaps as often as it should be, is when asset finance can provide a valuable lifeline too.
A notable example of this, was a haulage company Praetura Asset Finance were proud to be able to help recently. The company was a well-established, family run firm who had found themselves in arrears to the tune of over £1m with HMRC. They had trusted in the staff looking after their invoicing and accounting, but it emerged that over a five-year period (beginning in 2009), this hadn’t been done correctly. Quite the opposite in fact, hence the substantial arrears.
A deal had been struck with HMRC for the debt to be repaid in installments of £10,000 per month. Whilst obviously straining the company’s cashflow, this was being managed and the solution seemed to be working well for both parties.
That was until they suddenly received word from HMRC that the outstanding balance was to be repaid in full, or a winding up order would be instructed. This meant the company now had a matter of weeks to repay £588,000, or face bankruptcy.
The banks they asked said no. The funders the company had finance arrangements with, or had worked with in the past, also said no.
But their local broker had the advantage of working with Praetura Asset Finance; a consultant lender that doesn’t just look at the numbers on a balance sheet when making a decision: “Praetura had the sense and expertise to look at the wider picture” the broker told us, “they could see that the business was asset rich, but cash poor and took the time to tailor the solution to exactly what the client requested”.
Yes the deal was complicated, as it ended up involving the refinance of 67 trucks and trailers, with a wide variety of ages, some of which had existing finance in place which needed to be settled. The vehicles were in a range of locations, yet all had to be valued and inspected. Plus, charges on two properties were also incorporated to bridge the security gap, which meant solicitors being added to the mix too.
Meanwhile, Praetura’s Credit Director and the broker’s Business Development Manager flew out to spend a day with the client; to get to know them, to understand the history, how the business was coping and what their plans for the future were, as well as going through in detail what a refinance arrangement of this scale would entail and how it could be structured in the best way possible to suit the client’s needs.
The funding was split over two agreements, with 25 of the older vehicles funded over 36 months and 32 newer trucks and trailers refinanced over a five-year term, with extra security taken via a charge on property for each deal.
With a High Court date set (which would start proceedings to potentially close the whole business), there were deadlines to adhere to. HMRC were paid the entire £588,000 owed directly by Praetura four days ahead of schedule.
For so long this business had been fighting against the tide just to keep their heads above water. They can now look forward to the future and take the company forward onto bigger and better things.
Many other funders had said no without taking the time to understand the client or their situation. But that’s not how we work at Praetura; we’re here to work in partnership with the broker and their client, to look at all the available options and tailor the solution in a way which solves the issue. In fact, without wanting to blow our own trumpet, it’s something of a specialty of ours!
Refinance is becoming an increasingly popular option for SMEs throughout the UK and we expect this trend to continue in 2019.
These are uncertain times, we do not know what 2019 is going to bring and there are many who feel we’ve been in limbo for quite some time. But this shouldn’t be used as an excuse to hamper the growth of small and medium sized businesses up and down the country.
Instead, we should be encouraging more of them to look at the assets within their businesses and ask what they could do if they could convert the equity they hold into cold hard cash. Then we give them the keys to unlock that potential, by letting them know the options that asset refinance can make possible for them.
Whether funds are needed to repay debts, to consolidate, to inject working capital into their business to improve their cashflow, or allow new avenues to be explored, new premises to be purchased, more staff employed or to invest in new machinery: asset refinance can help.
If you want to know more, please contact the experts at Praetura Asset Finance today, by calling 0333 323 7830 or emailing firstname.lastname@example.org.