Easy steps to funding your diversification project

Are you looking to raise finance to fund a diversification plan? Subject to credit approval, Business Finance Brokers Ltd can tailor a finance solution to suit your individual business and your cash flow? 

We can help you secure asset finance from 12 up to 84 months on projects such as a new agricultural building, milking parlour (for cows or goats), pigs & pig arcs, revamping a building to be used as a farm shop and the fittings, fridges, ovens, display counters, equipment to make ice cream, cheese, bread, hog roasting oven, refrigerated vans, glamping, log cabins, mobile homes for staff use to name but a few.

There are four main funding options which may be available to you:

• Hire Purchase
• Lease Purchase
• Loan
• Contract Hire

Short term funding solutions of hire purchase or lease purchase are typically used for identifiable assets (assets which have a serial number/chassis number and/or registration number). 

What is a Hire Purchase?

• A hire purchase agreement involves acquiring an asset and spreading the repayment cost, usually with monthly repayments; however, we can tailor payments to suit your cash flow.  It is a flexible option so your business can easily budget for the asset as well as take advantage of the flexible repayment terms and fixed interest rates. 
• Usually a small deposit will be required (typically up to 10% but this can vary depending on whether there is a part exchange or on the repayment structure).
• VAT on the equipment cost is payable by you up front, in full.
• Documentation fee payable up front (varies depending on the finance company, this can be up to £250.00)
• Regulated* hire purchase agreements have the flexibility for you to make early repayments; up to once per year during the agreement. 
• Hire purchase is a good option for businesses looking to purchase assets that have a long-term use. The duration of a hire purchase agreement is usually between 12 and 72 months. 
• The finance company will hold title to the equipment until the Option to Purchase Fee is paid by the customer with the final payment, at the end of the agreement.  Upon payment of the Option to Purchase Fee, title passes to the customer and the finance company has no further interest. Depending on which finance company is used, the Option to Purchase Fee can be as low as £10 and up to £100.00.
• Hire purchase gives the same Capital Allowances as if paying cash.

*Regulated customers are Sole Traders or Partnerships up to three partners. If there are four partners or more this becomes a non-regulated business.

Finance Lease

Finance lease is another option that the customer may choose primarily for business & tax purposes. The main differences to HP are:

• A finance lease is an agreement in which you get full use of the asset without actually owning the equipment.  Ownership of the equipment is retained by the lender.
• You can continue leasing the equipment at the end of the primary period; at which point a secondary rental, specified on the finance lease documentation, will commence. The Secondary Perion Rental may vary depending on the finance company used.
• Rental charges can be offset against profits and claim VAT back.
• VAT is paid with each payment rather than at the beginning of the agreement.
• The asset can still be sold during the primary term and you will get a rebate for the remaining rental charges.  You may be eligible for up to 100% of the sale proceeds after settlement or the balance after payment of any settlement owing.

Finance companies will lend money against an asset using hire purchase or lease purchase where they can identify that asset and get access to re-sell should you default on your payments and a satisfactory resolution cannot be reached. 

NOT VAT REGISTERED? Why Leasing may be an option ………..

If you are not VAT registered, leasing may be a better option for you. Because you pay the VAT with each payment you do not have to find the VAT upfront, and can reclaim some of the VAT if you become VAT registered within a specific time period.

For additional benefits, please call 01455 635 677

Loan

Loans are used for non-moveable assets such as a building, concrete for flooring, drive or yard. The exception to this is dairy cows and also beef fatteners (where they do have an identification number but they are generally financed on a loan agreement).

Evidence is required to support the loan (i.e., a quotation for the goods). Depending on the strength of your existing business, we may need an up to date, full set of accounts, bank statements and/or a business plan.

With a loan agreement the money is paid directly to the customer.

Contract Hire

• An agreement to rent an asset for a specified period of time.
• No intention for the end user to acquire the asset at the end of the primary lease period.
• Asset is carried on the lenders balance sheet.
• Rental period is for less than the estimated useful life of the asset.
• The majority of Agricultural finance agreements are Hire Purchase agreements.

Equipment can be repossessed if the customer defaults on their repayments. If the customer has paid over a third, the finance company will require a court order to do this.

The easy steps to securing finance:
Call - 01455 635677