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Top tips on securing equipment finance for your start-up

Armada Asset Finance founder Kirk Smith shares how start-ups can secure asset finance for all sorts of essential equipment

In recent years there has been a major change in how start-ups fund their businesses. Gone are the days when entrepreneurs were dictated to by their ‘lender’.

If you’ve not heard of asset finance before, you’ll be surprised at what can be funded other than traditional vehicles and plant. Goods such as fixtures and fittings, flooring, software, catering equipment and scaffolding and complete fit-outs can all be financed.

It’s important to know about the option of asset finance as it’s often vital to start-ups. It means quality equipment can be purchased that might otherwise not be affordable. Your cashflow is thereby protected. Payments are fixed so it’s easy to budget and finance agreements can often be tailored to the business’s needs.

A finance lease agreement is the most common contract type. You decide what equipment you require. You decide who the supplier is. You negotiate the purchase price with the supplier. On submitting your information, it’s reasonable to expect a funding decision on the same day or within 24 hours.

The equipment is then leased to you for the agreed term, usually three years, during which time you treat the goods as your own, transferring title at the end of the contract period. It’s worth talking to an accountant about the significant tax benefits finance lease agreements can attract, in most cases.

Kirk Smith, founder and chairman of Armada Asset Finance for over 40 years, offers his tips for successfully securing equipment finance for your business.

Check you’re credit worthy

In the same way as you would before applying for a mortgage, check your credit search in advance and encourage your partners or directors to do the same.

Don’t borrow more than you can afford

Think carefully about the amount you will be spending on equipment for the business. Although asset finance has many benefits, the business shouldn’t be overstretched in the early days. Lenders will look at the potential for serviceability over the term of the contract.

Find a Guarantor if you don’t own assets

Having no financial background, unlike an existing business, means that underwriters assess your application by looking at the strength of the owners of the business. If those involved have little or no equity in a property, consider asking a friend or relative to act as Guarantor – you don’t necessarily need to be a homeowner to be accepted for finance.

Find out whether a business plan is required

Business plans and projections are not always essential. Unlike banks, alternative lenders don’t always need to see these. If your venture and requirement is large then it is useful and professional to provide one. Trampoline parks are a current start-up trend that would be considered a large venture requiring a big investment, however for a small start-up such as a fish and chip shop, a business plan would not be required. Underwriters are experienced in looking at every type of business proposition and gauging its prospect of success by looking at the complete picture. Concise background information will often suffice. However, lenders recognise that you will have seriously thought through your plans in order to produce projections.

Provide evidence of existing funds

Gather any evidence of savings or other funds being put into the venture – this will add strength to your proposition. Underwriters look to see the business is not going to be overstretched and is well funded in its own right before the addition of asset finance, rather than being solely reliant on finance. More businesses fail from underfunding than any other reason.

Be prepared to share your personal bank statements

Be open and prepared to show three months’ personal bank statements. With no business financials to offer, this helps the underwriters to build a complete background picture.

Get business premises

It is best to wait until you’ve secured business premises before applying for asset finance.

Choose your equipment from a reputable supplier. This is very important to a lender – who won’t want to see the equipment failing soon after delivery! They will want to know that you have guarantee and service back-up from your supplier.

Unlike lenders of the past, asset finance lenders are not looking at what likelihood you have of failing. If you get your ducks in a row now, your lender will be positively looking to support you and won’t be telling you how to run your business.

If your asset lender has looked at your business plans and financial information and wants to support you, he has confidence in you. Don’t look over your shoulder, be confident in yourself and keep moving forward. Sir Richard Branson and Sir James Dyson were you, not so long ago.

Armada Asset Finance has been dedicated for over 40 years to supporting start-up businesses throughout the UK.


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