A secured loan or secured debt is when the borrower has committed to give the lender charge over certain asset(s), such as a property or a car. If the client fails to make payments, the lender has the right to seize control of the asset(s) and sell it to recoup the money left outstanding. This can help reduce the interest rate payable on loans. Lenders quite often ask for some form of security if profit margins are tight, or if they want slightly more comfort with the deal. Normally with further security comes more lender comfort, then in turn we can normally garner a cheaper rate for the client.
An unsecured loan is issued and supported only by the borrower’s creditworthiness and affordability, rather than by any type of collateral. In some cases our lenders will request a PG (Personal Guarantee). It is worth mentioning even though the borrower becomes personally liable in a default position, this is still classed as an unsecured facility as there is no specific asset security. Due to the nature of unsecured loans, they’re the quickest to be underwritten and draw down, in some cases we can have an enquiry come through in the morning and have client funds in their account the following morning.
A bridging loan is a short-term loan facility that is secured on property and can be used to release large amounts of equity quickly. Bridging loans can be put in place more efficiently than a standard mortgage, in some cases a bridge can be turned around in less than a week.
Bridging consists of a number of types of facilities, but ultimately is a short term option and can be a real benefit to certain projects. Interest is charged monthly, or if the client prefers, for a little extra cost they can have the interest ‘rolled up’ and the total interest paid at the end of the term, with the capital, instead of monthly. The ‘exit’ must be agreed beforehand, and come in the form of re-finance or property sale.
Often used for property development projects, but doesn’t need to be specifically for that, and therefore can be of great benefit to new ventures or businesses where turnover or profitability isn’t going to be realised for a few months or years.
Asset finance is a flexible approach to funding that gives your business access to the equipment, vehicles, plant and machinery it needs, without heavily affecting cash flow. These commercial finance options can be used for both new and second-hand assets. They include everything from soft assets (Software, furniture, etc..) to large scale plant and machinery. Most cases we have dealt with have been for construction or warehousing, but asset finance can be used against any physical asset your business owns or needs to purchase.
We can also raise, what is known as ‘Sale and lease back’, in short, that is where a client owns assets within the business, and wants to raise money against them. To facilitate this form of finance, we would have to request a valuer goes to site to value the asset in question, then once the valuer has determined the value of said asset, the lender will then lend a percentage against, so for example:
£100,000 (Asset Valuation) * 70% LTV (Loan to Value) = £70,000 Loan.
Cashflow Finance – Invoice Factoring
Invoice factoring involves a third party paying you a percentage of your invoices immediately, with the third party then running your credit control to recover the sums in total from your clients. The balance will be paid to you once it is recovered. Your clients will be aware you are factoring your invoices, as it is the third party that would be chasing invoice payments. However, they call as if they a calling from your company or on behalf of your company, so clients are aware it is your business they are dealing with. In our experience this is a great cashflow solution for companies issuing large value invoices which have terms of 30days or longer. With a percentage of the invoice value being paid on the date it is raised, it would cover your cost of delivering the product/service to your customer.
Cashflow Finance – Invoice Discounting
Invoice discounting has some similarities, but it involves you borrowing money from a third party against the value of the invoices you have raised. That will be done in advance of your client paying the invoice and the intermediary’s services will therefore typically be invisible to your customers.
MCA (Merchant Cash Advance)
A merchant cash advance (MCA) isn’t technically a loan, but rather a cash advance based upon the credit card sales of a business. A small business can apply for an MCA and have an advance deposited into its account fairly quickly. Jones & Co sourced £75k MCA loan for a car garage which only took two days from application to deposit, when the funds were desperately required by the client.
Revolving Credit Facility
A revolving credit facility is a line of credit that is arranged between a lender and a business. It has an established maximum amount, where the business has access to the funds at any time when needed. This type of credit is mostly useful for operating purposes, especially for any business experiencing sharp fluctuations in their cash flows. Jones & Co was the first broker to have a £200K revolving facility approved with Iwoca, which was no mean feat, and enabled the client to honour some key contracts that had been won, and he needed the cashflow to fund.
Trade finance is a facility where by you lend against the value of goods coming in or out of the UK, and it concerns both domestic and international trade transactions. A trade transaction requires a seller of goods and services as well as a buyer. Lenders on our panel are willing to facilitate these transactions up to circa £5m.
Commercial Mortgages & Buy to Let
Commercial Mortgages are the perfect product for a business looking to purchase trading premises, or commercial landlords looking to profit from letting commercial units.
We have relationships with most banks, traditional lenders, as well as other specialist lenders with terms such as:
- Interest Rates depending on risk factors rates start at 1.75% over base rate
- Interest only also available
- LTV can be arranged at 80%, or 100% with you are able to offer additional security
Commercial mortgages can finance any type of commercial unit such as Retail/Factories/Warehouses/Care Homes/Dentists/Doctors/Industrial units
Business Credit Card
If used correctly, a credit card can aid cashflow. Best used for small unplanned expenses, if managed correctly and paid on time your limits will increase, as will your credit score. If your company struggles to get credit, this can be a good place to start. We have multiple lenders on our panel offering credit cards. A great way for small business or start-ups to boost their credit worthiness.
Refinancing/ Consolidation Finance
If your company already has borrowing within it and you have kept up to date with payments in accordance with your loan schedule, there is an opportunity to refinance the debt. The goal being to secure a lower rate, and in some occasions obtain some additional cashflow. This is great for companies that took out finance at a high rate when they needed it most. If you are looking for a new loan when you already have borrowing, in most cases it would be worth looking at refinancing the old debt to help keep the repayments manageable.
Management Buyout Finance
If the situation arises where you need to buy out a business partner or buy a division of an organisation you already work for, we would be able to secure finance using the company assets as collateral to fund the buyout. Instead of paying out of cashflow, finance can be sought after to relieve any unnecessary stress on the business.
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