Sourcing business finance can give you a headache, with so many options available. With finance companies, brokers and banks all offering business finance, it’s vital you make the right decision for your organisation.
TotalKare recognises that what might suit one customer may be completely unsuitable for another, particularly when it comes to the way they wish to finance the purchase of new heavy duty workshop equipment. So in collaboration with Lee Schofield of our partners PMD Business Finance, we’ve put together this guide to help you demystify the subject…
For equipment or project finance, avoid the bank!
Lee: “It’s best to avoid the bank for equipment or project finance, as they’re best left for more traditional finance, such as overdraft and mortgages. Banks tend to take security that covers all their facilities – normally through a charge on property or a debenture on a company.
“Asset finance is generally only secured on the equipment, which allows business owners to acquire equipment without overexposing themselves. Most businesses tend to use a blend of bank and asset finance – this allows true flexibility and the most choice for funding.”
Need finance quickly?
Lee: “Asset finance facilities (for equipment) can be arranged very quickly. Modest information is required and the answers typically take less than a day. Similarly, loan facilities through specialist loan providers are also quick and easy to access. However, banks can take months to reach a decision and this is precious time that businesses can’t afford to lose when they need to move quickly with a project.”
Be mindful of ‘umbrella security’
Lee: “You should always beware of ‘umbrella security’ and also beware of the bank-owned asset finance company – banks often take into account your overall exposure with them, and that can include asset finance when looking to sanction new facilities. Businesses shouldn’t be exposed to the whim of the bank manager, it’s a huge risk – although these days the decisions aren’t even taken by those you would meet in a bank, but people in at head office.”
Is it cheaper and simpler to use a broker?
Lee: “A common misconception is that it is more expensive and potentially more complicated going through a broker. We’re in ‘the age of the broker’ and we can compete against bank owned finance companies on rate, so we’re certainly not more expensive. These days, most funders prefer to use brokers as their outlet because they’re tired of running their own sales teams, so they provide discounted rates to brokers. It’s a more profitable strategy as they don’t have the hassle of running sales departments with associated costs and they only pay commissions on deals that come to them, with all other costs being borne by the broker.”
A trusted provider
Asset finance and business loans can be provided under one roof by specialist brokers. PMD Business Finance is one of the largest in UK, enabling you to make borrowing decisions with confidence.