Paul Caunter is Director at Ignition, a leading UK provider of vehicle and asset finance for SMEs, based in Truro. He explains how refinancing existing assets can help give SMEs a financial boost:
Any business looking to purchase new or used vehicles or equipment, is likely to consider asset finance as a sensible solution. A typical Hire Purchase plan provides immediate use of new equipment whilst spreading payment over a number of months, preserving vital working capital. Similarly, Finance Lease plans offer a rental solution for new equipment, whereby the equipment remains the property of the lessor and is rented over an agreed period of time. But what many business owners don’t realise is that asset finance solutions can be available for assets they already own.
Most SMEs reach a point where they could do with some extra funds, whether to help them expand, diversify, or navigate through a leaner period. Refinancing is a means of selling existing valuable equipment and buying it back slowly over time, whilst retaining use of it throughout.
Over the years, we’ve helped many businesses achieve their goals by releasing equity in this in this way. For example, Ross Trevethan runs RZT Ltd in Camborne, providing landscaping, agricultural contracting, groundworks, civil engineering and construction services. Last year, Ross decided it was time to take his business to the next level and focus on expansion and diversification, but he needed some extra funds. He began exploring various business loan options and contacted Ignition for advice. He comments:
“When I spoke to Ignition, they suggested I use some of my existing machinery as collateral for a loan. I realised that my business already had substantial assets, which could be used to unlock additional funds to help move the business forward.”
Essentially, Ross was able to sell two tractors and a JCB wheel digger to Ignition for a lump sum, and make regular payments for hire and eventual re-ownership.
“It was remarkably simple and easy to arrange. I received the funds within seven days of first contacting Ignition. We’ve been able to purchase additional equipment and have already taken on more contracts as a result,” Ross adds.
In addition to refinancing, there are a number of other financial solutions available to SMEs wanting to boost funds or reorganise their finances. Invoice Financing for example, helps to release capital tied up in outstanding invoices. With ‘debtor days’ on the increase and customers taking longer to pay their invoices it is unfortunately a common scenario for SMEs to be hampered by a lack of cash flow while they wait for payment for their services. Invoice Financing can release up to 90% of the value of invoices, helping to maximise funds and improve cash flow.
Many smaller businesses also find it helpful to take out Corporation Tax Loans, to take the sting out of that dreaded annual tax bill, which can prove a real headache for some. Corporation Tax Loans spread the cost of tax bills into more affordable monthly payments, helping businesses take control of their cash flow, and avoiding nasty surprises.
Finally, Ignition can also supply general Commercial Loans which are available for a variety of business needs that may be less tangible than specific assets or equipment, such as launching a marketing campaign, recruiting additional staff or refurbishing premises.
At Ignition, we value building long-term relationships with our clients and help provide finance without the usual hassle. Call us to find out how we can help your business.