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Company News

Financial Conduct Authority – Full Permission Received

I am pleased to announce that we have now received our Full Permission from the Financial Conduct Authority (FCA).  The FCA now regulates the Consumer Credit industry and everyone who previously held a Consumer Credit Licence has had to apply for authorisation from the FCA if they wish to continue their consumer credit activities.  Initially everyone had to apply for interim permission and then complete an application to obtain full or limited permission depending upon their business model.

We are delighted to have completed the application process which has and will continue to raise standards across the industry and provide better protection for consumers.

 

Beware of Unwanted Insurance

Most asset finance lenders will have a requirement for the asset to be covered by general insurance.  This is to protect their security in the event of fire or damage.  However some lenders will write to you a month or so after the agreement is set up.  The letter will request that you contact their insurance broker and provide them with a copy of your general insurance schedule.

If you ignore the letter they then increase your monthly repayments and cover the equipment on your behalf and your asset may be covered twice.  They are relying upon the inetia of customers who ignore the letters to make additional profit.

Premier Business Finance will not work with lenders who operate this system for our customers.

Keith Pallett, Managing Director.

Business Bank Overdraft – Is It Right For Us?

A bank overdraft is a credit facility you agree with your bank to allow you to borrow up to an agreed overdraft limit.  It is designed to cover short term borrowing requirements for the financing of working capital.  It should not be used for permanent, long term borrowing.  If part of an agreed overdraft facility is always in debit the bank will refer to this as “hardcore borrowing” and may look to transfer this to a seperate loan faciity or encourage you to use alternative finance such as their own invoice finance department.

Interest is payable on a variable rate basis charged on the outstanding balance on a day to day basis at an agreed margin over bank base rate.  There is usually an initial arrangement fee charged and an annual renewal fee.

Advantages of a Bank Overdraft

  • Flexible.  You only borrow what you need for as long as you need it and only pay for what you use.  This means that often less interest is payable than alternative forms of finance such as bank loans, asset finance or invoice finance.
  • Usually quick and easy to arrange.
  • There is usually no penalty for early settlement.
  • Interest rates within the agreed overdraft limit are often very competitive, particulalry if you have a strong balance sheet.

Diasdvantages of a Bank Overdraft

  • The interest rates and fees for exceeding agreed limits can be very expensive.
  • Annual renewal fees can be increased if your circumstances change such as falling profits or trading losses.
  • High levels of security may be required including charges over Directors personal houses.
  • Your bank overdraft limit may be reduced if your circumstances change, often at a time when you most need it.
  • A bank overdraft is repayable on demand and you can be asked to repay at any time without any warning.  This will often  be at a time which suits the bank and not the customer.
  • Interest rates can be high if you don’t have a strong balance sheet or inadequate security.  They may also be increased if your circumstances change.

In some cases it may be better for a business to consider alternative forms of finance such as business loans, asset finance, asset refinance or invoice finance.  Interest rates often compare favourably and no charges over personal property are required.  In addition they are not repayable on demand.

Please contact us for more information regarding Business Loans, Asset Finance, Asset Refinance or Invoice Finance.

Keith Pallett, Managing Director.

European Investment Bank Grants For Machinery

One of our underwriters is presently offering assistance on finance for machinery with grant assistance from the European Investment Bank.  We can obtain a reduction in the interest rate of 0.25% per annum which is paid in advance as a cash rebate.  The minimum balance to be financed in £75,000 with repayment periods of either 4 or 5 years.  Whilst it is not a huge amount it is still worth having.  We are just looking at a finance agreement for 2 x New Mazak Machines where the balance to be financed is £252,100 and the grant is £1,517.14.

Please contact us for further information.

Annual Service Fees – Check the small print.

In 2007 one of the asset finance lenders was thinking of ways to cover the costs of some their office support staff.  These were the staff who provided things such as settlement quotations, copies of documents and general administration queries.

They came up with the idea of charging annual service fees.  Since then many others have also decided to charge them.  Often these are not fully disclosed at the quotation stage so whenever you are signing asset finance documents check them carefully.

At Premier Business Finance we have agreed with all our regular lenders that no customer will be paying such fees.  In the unusual event of us having to use a non regular lender any such fee is fully disclosed and there are no disappointing surprises.

Please contact us for further information.

 

Director’s Personal Guarantees – Beware

In many cases when lenders make an offer of finance it will come with the underwriting condition that a Director’s Personal Guarantee is required.  However some lenders use documents which are drafted on the basis of a “blanket” or “continuing” security basis which is not always fully explained to the customer.

We completed some finance for a customer recently who told me about his unfortunate experience.  He had previously dealt with one of the major finance houses and that he had given them almost all of his business for many years.  This was partly due to to the fact that they never asked him to sign any personal guarantees after the very first agreement they completed and that they were never requested again by the lender.  The fact that no personal guarantees were involved was very important to him. He was then very disappointed to discover years later when has borrowings were up to over £300k that on the very first agreement he had signed a “blanket” guarantee.

A blanket guarantee contains an “all monies” clause and also a “continuing security” clause.  These basically mean that the personal guarantee you are providing not only covers the present agreement but also all of those you may have completed in the past and also all of those you may complete in the future with that same lender and maybe even other parts of their group.

It is therefore very important when you sign a personal guarantee to check that it is specific to the agreement you are completing or alternatively be aware of the implications of “blanket” guarantees.

Keith Pallett, Managing Director.

Turning machines into cash.

After a slowdown in August maybe a boost to cash flow is needed.  Machine Refinance could be the answer.

 

http://premierbusinessfinance.co.uk/machine-refinance/

Annual Investment Allowance Change

I have been asked several times recently about the Annual Investment Allowance.  It is presently £500,000 per annum for the purchase of plant and mschinery.  It was due to change back to £25,000 on 1st January 2016.  However George Osbourne announced in the recent budget that it will now be £200,000 with effect from 1st January 2016.

Keith Pallett

Phone Ringing Again

After a month of thinking our telephone had been disconnected it has started to ring again this week.  Generally most people I talk to have had a quiet spell over the last month or so.  Hopefully we will have a good run of business once the holiday period is over. The concerning news stories such as Greece, the depressed oil price and weakness of the Euro against the pound have certainly had an impact on the manufacturing sector.

Dedication To Duty

On a short break in Cornwall this was one of the only places MD, Keith Pallett, could get a mobile phone signal.  This was right on top of the sand dunes near Perranporth.

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