Financial Tips for Business
16th January 2023
The New Year has brought some interesting financial products to the market place, and also some revised products making funding cheaper than it was last year for some.
Our partners Choice Business Loans (CBL) has seen some lenders increase the size of their maximum loans, with some extending terms, all based solely on a personal guarantee. These have also reduced the starting interest rates – excellent news for businesses who are looking to grow this year.
The Recovery Loan Scheme is still available. Remember, the scheme can be used to support all sorts of business activities such as growth, acquisition and help with new contracts. It also considers businesses that have taken a little longer to recover from COVID, but who are now showing profitability and need a hand so support that continued growth.
New to the market is a rather interesting funding opportunity which allows businesses to secure funding to pay specific invoices and then repay the lender over 3, 6, 9 or 12 months, or even as a % of future sales. What are the benefits? It will allow businesses to negotiate early payment discounts, even out cashflow, or take on bigger orders or projects where payments are on completion. As this can be done multiple times, and is on a fixed fee, it could be more flexible than taking out a standard loan. These tend to be underwritten based on a cash run way, rather than P&L and balance sheet, so could open up doors for far more businesses than traditional lending. This is also an option for businesses to offer credit terms to their customers as an alternative to invoice finance.
Ironing out cash flow bumps is a hot topic for businesses. To support cash flow, businesses can pay various HMRC bills on a 3 – 12 month term, helping keep some cash in the business. CBL has also seen an increase in enquiries for invoice finance lines and for revenue based loans for online and brick & mortar retailers.
For those businesses trading under 3 years, or who are just starting out, the British Business Bank Start Up Loans are still very much available as a low cost loan (6%). CBL has had great success last year with helping Start Up’s secure this funding, and very much look forward to helping more this year.
Owner occupier commercial property loans are still very much desired by lenders, CBL now has a 10 yr fixed mortgage available, which is ideal for the smaller mortgages where the cost and hassle of refinancing after a few years outweigh the cost of the fixed price!
25th October 2022
Another stormy month in politics, but hopefully now our new PM, Mr Sunak, will bring calm after the storm. Regardless of who we support politically, we just need some stability, so we as business owners can start to plan properly, without having to worry about sudden change again.
CBL are seeing businesses wanting to keep cash at bank, as cash liquidity is going to be crucial over the next few months. They have seen a rise in asset finance enquiries, especially for electric vehicles and upgrades to machinery to be more energy efficient. It’s worth noting that some types of low-emission vehicles are eligible for a grant from the government, the seller includes it as a discount in the purchase price, so it is worthwhile asking if they are able to apply for the grant. https://www.gov.uk/plug-in-vehicle-grants
They are also seeing some clients looking to release cash that is tied up in large vehicles and machinery to help with cash sustainability. Asset refinance has become more popular over the last few months, and is worth considering if your clients need a cash injection.
The other asset that CBL’s clients have been looking to realise is the debtor book. Invoice Finance has come a long way and is no longer the distressed product it was. It is worth while remembering CBL have options that act more like a revolving credit facility than an invoice finance line.
• A line of £250k – £5million, size subject to your accounts receivable B2B only.
• Completely confidential
• No trust account
• No floating charge
• No personal guarantee
• No need to submit invoices
• No lock in agreements
How does that sound? A facility like this could transform some businesses and it is really not an expensive option. CBL has done a few of these now, and the flexibility and ease of use is getting good reviews.
If you have a questions please do contact us or CBL
4th October 2022
All the headlines continue to suggest that we are all doomed!
Although interest rates are rising, energy prices are increasing and some lenders have pulled products with immediate action, there are some positive things happening in the market which seem to be overlooked.
Market reactions have varied within our lending panel. Some are honouring the rates they have offered, increasing their rates only for new applications. Choice Business Loans (CBL) have lenders that are not changing their rates at all, with some adjusting their lending appetite. Others have increased their rates by 2-3% with immediate effect.
None of us have a crystal ball, but being the resilient business owners we are, we can be proactive in putting together solutions to help us ride any future storms.
Some of the solutions we are discussing include the new Recovery Loan Scheme (which has finally become active), flexible lending and revision or diversification of suppliers, all of which are important factors to any UK business needing to raise finance in the coming years.
The new Recovery Loan Scheme (RLS), for example, is capped at 14.99% AER. With BoE base rates estimated to reach 6% next summer, the RLS could be a saving grace for many businesses once again. Although lenders can take a Personal Guarantee under the new scheme, this does not include the Director’s primary residence or car; offering extra protection for business owners.
In addition to the RLS, we have lenders who are offering fixed rates and the flexibility to repay early, whilst saving on interest; giving businesses the ability to refinance onto a better rate once they are back to sustainable levels. A couple of lenders have given the heads up that they will have new products coming to the market in a few months, all with lower rates as they have secured money with a lower return rate.
Invoice finance is making a resurgence as an ongoing solution to cash flow peaks and troughs. No longer a distress product, it has multifaceted solutions from singular IF through to whole book facilities; a cost effective solution when used correctly.
If you require funding in the next 12 months, now is the time to start exploring options. CBL are always happy to have a conversation with you about potential solutions, so please do reach out.
20th September 2022
There appears to be another perfect storm brewing for the SME business owner with rising costs of supplies and staff. Inflation seems to be pushing things further every month whilst the uncertainty of rising energy and fuel bills, supply chain challenges with various strikes, and the aftermath of COVID are still lingering in the background.
Before we all throw the towel in, there is light! Inflation has shown small signs of slowing, and the Bank of England are still committed to balancing this out with careful interest rates increases. (Not great for all, but a needed action.)
Despite some delay the Recovery Loan Scheme 3 is on its way. More lenders are being accredited and we hope that lending limits will be given soon so Choice Business Loans (CBL) can continue to provide that support to our network.
There should have an answer on energy soon. Rumour has it that it could be substantial and weighted in favour of SME businesses.
The lenders are being pragmatic and proactive too. They are supporting businesses who are looking to bulk buy to help cover off any future shortages or delays. They are specifically helping spread VAT, Corporation Tax, and large PI insurance bills by lending for these purposes, easing out cash flow peaks and troughs.
Asset lenders are also still keen to lend to help you buy vehicles and machinery. They will refinance unencumbered assets to help you release tied up cash to help with cash flow.
Recently CBL has seen an increase in acquisition finance requests – for those that want to sell a business, now could be a good time.
Cashflow for all businesses will be key to getting through the next few months, and CBL still has many good options to help businesses find the right solution for them.
It’s important to shop around to get better deals in all aspects of your business, not just finance, to make cash savings. It can be worth the time investment and can have a big impact.
Please do get in touch if you want to review these options to get an early understanding as to what is available.
Once again, the SME business owner is required to show the greatest resilience during difficult times. We have done it before, and we can do it again. If we or CBL can offer you any support, if you would just like to talk something through, or tap into our large network of suppliers, we would be delighted to assist.
2nd Septmber 2022
This has been one long, hot summer so far. We may even have more to come, but that doesn’t stop our businesses from working hard every day.
It’s important that the things we purchase for our business work just as hard for us and we need to identify ways to protect our business now and in the future. Whether that’s by reducing your tax bill or spreading the cost of bulky transactions to reserve or release cash, there are many different ways you can protect your business, here are a few examples.
Reducing Your Tax Bill
In 2021, the Chancellor announced a number of capital allowance incentives in his budget that whilst being temporary are still in place and will remain until at least 31 March 2023. The headlines for these allowances are:
• a 130% super-deduction capital allowance on qualifying plant and machinery investments
• a 50% first-year allowance for qualifying special rate assets
The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, ensuring the UK capital allowances regime is amongst the world’s most competitive.
There are some specific areas of guidance in relation to property – You can find the full details on the property super deduction and the benefits of the super-deduction capital allowances HERE on the Choice Business Loans (CBL) blog.
CBL have been supporting many clients who are investing in assets for their business such as vehicles, machinery and specialist kit. Often businesses use cash reserves to buy such items outright which can cause a cashflow challenge down the line.
Some of their clients have previously purchased assets with a large balloon payment, and with the final payment looming, they are now left to find a chunk of change to finalise the deal.
A number of lenders are keen to refinance unencumbered assets to release cash that is tied up. CBL also have lenders who will finance the balloon payments too, sometimes with a balloon payment 3 years down the line to keep the repayments small.
The Recovery Loan Scheme
A reminder that the RLS (Recovery Loan Scheme) has now launched with just a handful of lenders accredited so far, but more will join the panel soon.
The two main changes to the scheme are:
• Personal guarantees can be requested by the lender, but the Directors main residences are excluded.
• You no longer need to have a COVID impact to be eligible.
It is still a strong scheme that will help many businesses who are feeling the effects of the COVID closures and indeed Brexit supply chain challenges.
If you have a cash flow squeeze in your business, please do contact us or CBL to discuss the numerous ways that we could assist you. There is often more than one way to find a suitable solution.
3rd August 2022
August is here and the summer holiday season is in full swing. At least the weather has returned to it’s normal levels now!
We have now recovered from the mad rush of the Recovery Loan Scheme (RLS) and now we move to the RLS 3.0… Well, not quite yet!
It is pretty much as we thought; the same as the old RLS, but lenders can now ask for a personal guarantee (PG). This excludes the Directors’ main residence. As for a launch date, lenders are being accredited once again to deliver this, but the British Business Bank has yet to release an official start date.
An interesting new product has come to market and our partner Choice Business Loans has been invited onto the broker panel. An offering of Export Finance that is backed by the UK Export Finance department. It is unique as the target client is up to a £5mil turnover, covering a gap in the export finance market.
Currently, they can lend up to £300k to UK Companies (ideally 3+ years trading) who are already exporting – selling a product or service to business customers outside of the UK.
- Funds can be drawn in one go or in tranches
- Each tranche (min £26k) becomes a standalone loan repayable over a term of up to 12 months, with monthly capital and interest repayments.
- 5% arrangement fee (on whole facility amount) payable on first drawdown
- Cost of funds typically 1.6%-2% pm.
- Monies repaid can be re-drawn subject to the minimum drawdown amount being £26k.
This could be a huge assistance to companies that are exporting and are too small for high street banking facilities. Feel free to contact us if you think this could help a customer of yours.
Much like the weather, business seems to be returning to normal levels and there are lenders who have an appetite to lend. Choice Business Loans are seeing some really good rates, and the majority of our lenders are fixed rates, which is worth while thinking about as Bank of England base rate is rising. The word on the street is that it will be at 3% by Christmas with the potential to rise to 5% – add that to an above base interest rate and it starts to become expensive!
20th July 2022
Summer is in full swing. Maybe too full after the last couple of scorching days, but we wouldn’t be British if we couldn’t moan about the weather!
Another thing we like to moan about is taxes, and it is that time of year again where Self-Assessment payments are due.
One effective way a business can leverage cash is by spreading the cost of VAT, Corporation Tax and Self Assessment Tax bills.
This allows business’ to reinvest their cash into growth, support their cash flow or hold onto more capital to prepare for unforeseen circumstances.
With the additional payment to HMRC for Self-Assessment Tax due by 31st July, there are ways of spreading the cost of your tax bill over 3-12 months from a fixed rate of 8.6%, with no arrangement fee.
If you have already settled your bill but would prefer to leverage your cash, it’s not too late!
Funding may be agreed up to 30 days after the HMRC payment due date, even if you have already paid.
If you would like to explore the options to spread your tax bill please contact www.choicebusinessloans.co.uk
To initially explore your Self-Assessment finance options, they will need:
– Latest annual filed accounts (full P&L and balance sheet)
– Management accounts that are no older than three months
– HMRC statement confirming all outstanding tax liabilities
– Bank statements for the last 3 months along with confirmation of any overdraft
30th May 2022
Update on the Recovery Loan Scheme (RLS):
More lenders have closed their doors to RLS applications as they hit their limits, and most are reverting to offering business as usual loans. Choice Business Loans (CBL) still have a handful of lenders whose doors are open, but the options are getting limited.
In most cases business as usual loans will mean the return of signing personal guarantees (PG), something they think we shall have to get used to once again. If you need to sign a PG and are nervous about it, don’t forget we have access to personal guarantee insurance, a tax-deductible business expense, that can help protect you if things go wrong.
The halfway point in the year is always a good time for reflection and future considerations. These last few years have been unprecedented and some business owners are thinking about growth whilst others are considering cashing out and taking stock. If you are thinking of selling your business or would like to in the future here are some great tips to help prepare your business for sale. (Find the full blog from CBL here)
Preparing your business for sale:
- Ensure your decision to sell remains confidential. Keeping your team and staff on an even keel is vital.
- Maximise your business’s profitability. Seems obvious but crucial.
- Make sure your records are complete and up-to-date. Your records will be scrutinized, so no mistakes.
- Define your brand. Make sure that it is clear throughout all communication channels.
- Retain key employees. A skilled, knowledgeable, and committed team is an attractive asset to potential buyers.
- Document your business’s guidelines and processes. An easy handover makes for an easier sale.
- Address any existing or potential liabilities.
- Make your business location sparkle. You will be on show – so no warts!
- Create a customer profile and compile sales data.
- Assemble a good team. Avoid going through the sales process on your own – Putting together a good team of experienced advisors, including a lawyer, an accountant, and a business broker is essential.
Equally if you are looking to buy a business CBL can help with acquisition funding, and introductions to business sale brokers.
6th May 2022
There are some important updates for the Recovery Loan Scheme (RLS) which will impact applications.
The closure date is the 30th of June. However, unlike the CBILS, this is not the application deadline date. Instead, the application has to be credit approved by the 30th of June!
Depending on the lender, getting to a credit approval can take in excess of two weeks. The volume of applications has increased dramatically and the advice from Choice Business Loans is that you should not delay if this is a loan that you wish to apply for!
Two of their lenders this week reached their RLS funding limit and have therefore closed the door on new applications. They anticipate that more lenders will follow suit in the lead up to the deadline.
A quick reminder of why the RLS is a good option for businesses:
- No personal guarantees under £250k, and limited to 30% for loans up to £2mill.
- Maximum interest rate they are able to charge is 14.99%.
- Multiple uses of funds.
- Can be obtained in conjunction with a CBILS and BBL.
N.B. If the lender can offer better terms on their ‘business as usual’ product, then that has to be offered rather than the RLS .
If you would like to explore the option of a Recovery Loan for your business, please contact www.choicebusinessloans.co.uk
For those companies who work with Not For Profit Organisations and Charities, it is useful for you to know there is a specific lender for the RLS for this sector and they have advised us of the following:
The Recovery Loan Fund offers eligible organisations loans of £100K-£1.5m, with a 1-6-year term and offers grants alongside loans for Black and Minoritised-Ethnicity led organisations in England. The Recovery Loan Fund for Charity and non for profits is open for applications until 11.59pm on Friday 20th May 2022.
20th April 2022
This is a timely reminder that the Recovery Loan Scheme (RLS) is finishing at the end of June. We are yet to hear of the replacement, but it is very clear that businesses heavily effected by COVID are needing RLS support moving forward as they get back on their feet.
Unfortunately, some people have been mis-informed about who can apply for the RLS, so this is a good opportunity to remind you of some key criteria. Full details can be found here.
The maximum RLS is determined by three main criteria:
- 25% turnover in 2019, minus any CBILS
- 2 x annual wage bill, minus any CBILS.
- 18 month liquidity need (CBILS not taken into account)
The BBL’s are not taken into consideration in any application, and it is at each lender’s discretion as to which of the above criteria they base their lending on.
A lender, or lenders, can provide up to £2 million as one or more of the following facilities:
- Term loan
- Invoice finance
- Asset finance
Our partners, Choice Business Loans, are FCA regulated, and this means that they can work with a broader selection of lenders. They also support sole traders and can arrange consumer asset finance.
They also have a lender who can provide consumer asset finance, funding assets such as boats, small planes, gliders, classic cars, horseboxes, motor homes and rally cars as an example.
This is a great opportunity for business owners work to support their lifestyle. Being able to make monthly payments for something can be easier than taking out Directors loans from the business.
Also, using asset finance to release the value of a personal asset so you can inject it back into the business can be a smart way of raising money for the business.
31st March 2022
To add to the turbulence of the business world we still need to keep an eye out for those people who aim to scam us out of our hard-earned money. The NACFB (National Association of Commercial Finance Brokers) have highlighted that scams on businesses are increasing and have issued some good advice to protect your business. The three main points are:
Stop: Taking a moment to stop and think before parting with your money or information could keep you safe.
Challenge: Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.
Protect: Contact your bank immediately if you think you’ve fallen for a scam and report it to Action Fraud.
The UK’s Take Five campaign https://www.takefive-stopfraud.org.uk/ is a really useful resource to tap into for posters and training aids to keep your company scam free. It also has information to help the vulnerable, elderly or indeed anyone, to avoid scams.
15th March 2022
Cost Savings for Businesses
With the cost-of-living spiralling, now is a prudent time to consider what costs you can shave in your home and in your business. Here are just a few we thought were worth mentioning:
With mortgage rates still at an all-time low, it is worthwhile checking to see when your current fixed rate renewal is due. Some mortgage companies will allow you to change products up to 3 or even 4 months early without needing to pay any early redemption charges, so you could save money right away. With the Bank of England rising and with many in the mortgage market saying this will continue throughout 2022, maybe now is the time to act and to see if your can save money. We can put you in touch with an experienced mortgage advisor who can look to see if you are able to take advantage of these low interest rates or maybe assist you if you want to raise further money for other projects, i.e. home improvements.
Insurance costs are rising so shopping around is more important than ever to get the best deal.
Green is the way forward, and buying an electric car via your business can have some good tax benefits. In some cases, like the cycle to work scheme, you can even do salary sacrifice to allow employees to buy a new electric car. It is deducted before tax and NI so everyone is a winner! Speak to your accountant about the best way of doing this.
Joining a buying consortium can often lead to cheaper prices on printing, stationary etc. It’s worth shopping, as these often come with buying portals that you can monitor if you have teams that need to buy things directly. It can also give you keener prices and help monitor unnecessary spending.
Both business and personal, it’s best to try and pay off the card each month to avoid the interest. Bit if this is not possible, it could save you a lot if you can find one with a lower interest or one that gives you money back.
Credit Card Terminals:
It is always worth checking costs on terminals. Better deals come out all the time and you want to maximize how much of the sale you get to keep.
Just because you took a loan 3 years ago, doesn’t mean you can’t refinance it into a cheaper loan. It’s worth taking a look at all your business loans, as some lenders allow you to refinance a small amount into the Recovery Loan Scheme if it makes sense to do so.
Sometimes it’s worthwhile spending money on things. Income Protection is one particular insurance product that is very under appreciated and potentially known to many. If you own your own home or even rent, income protection could help pay those important bills if something should happen and you are unable to work due to a long-term illness or injury. Taking that huge financials stress away, giving you time to get better and look after your family.
Saving money and having peace of mind is always a good thing for any business owner.
If you would like to discuss any of the above, or be directed to a trusted mortgage and protection advisor, we can refer you to people that can help.
020 8863 4566
I have known and worked with Charterhouse for over 7 years. When it comes to property planning tax advice, they have helped many of my customers understand and realize the benefits of structuring the portfolios in the most efficient fashion. By working with the customer and their advisors, the best advice is clear and understood by all parties. When it comes to property portfolio tax planning, you will be in the safest hands with Charterhouse.
Choice Business Loans