Lending to more businesses looking to buy an asset

Today, we’re pleased to announce that we are trialling a new process for asset finance loans. We have helped businesses access finance secured on a specific asset (such as a piece of machinery, equipment or commercial vehicle) since 2012, and over the last few months we have been reviewing how we can improve this experience for business owners and provide more lending opportunities for investors.

Asset finance is a competitive market which is defined by simplicity, speed and competitive rates. Businesses looking to buy an asset need more certainty over when the supplier will be paid and the interest rate that they will pay. To provide business owners with certainty of cost, asset finance loans will now be fixed rate. This will allow us to release funds for the transaction as soon as the auction ends.

As before, Funding Circle Asset Finance Limited will still hold title to the asset and in the event a business is unable to repay, we will take steps to recover the asset and sell it on behalf of investors.

A valuation of the asset will be completed by a third party specialist asset valuer, who have significant experience in valuing, recovering and selling equipment of all types. This will be provided on the financial summary page as a pdf. The recovery value of the asset is indicative and will depend on its usage and the way it’s maintained.

Whilst we will place more focus on the asset for these kinds of transactions, we will continue to carry out the same high level of due diligence when reviewing the ability of the business to afford and repay the loan. If a borrower is able to provide up to date management account information, we won’t always require bank statements for these types of deals.

We will be testing these basic processes from today, and may make further improvements as we move forward. As always, if you have any questions or feedback, then we would love to hear from you so please get in touch or join the conversation on the forum.

The Funding Circle team

Natasha

Head of Corporate Communications

 

2 thoughts on “Lending to more businesses looking to buy an asset

  1. I think this is a good idea and worth a trial. However, two things Funding Circle need to be aware of:

    1. Potential investors need decent and full information on the business and the way the money is going to be used. The old Business Profile rules required far more information to be put forward and the new ones mean they can get away with absolutely abysmal information. That just means serious potential investors now have to spend a lot of effort and time squeezing the right information from companies.
    2. The investors need to know that there is a lien on the assets that are to be purchased so we can get our money back if all goes “pear shaped”. the loan to asset value (not asset cost!) ratio needs to be set at a decent level.

  2. My partners business is flying. It’s a home bakery and demand far outstrips supply so she’s opened a cafe with a bigger facility on the next floor up to provide more than enough produce for the current demand. My background is in training and education and both of us have decades experience in business. We are probably ready structure wise with the ability to deliver staff training and to ensure the business can cope with expansion However, two more opportunities to expand even further have came up but possibly without funding or some financial support its probably about 6 months too early leaving little working capital if we equip the two new opportunities. The dilemma is do we expand with support from someone like funding circle or let these two huge opportunities go? Looking at the current figures repayment wouldn’t be an issue and a contract with Just Eat can be transferred in effect guaranteeing repayment on all our card sales through Just Eat – our lowest monthly payment was £600 and our highest £1500. Can there be a flexible repayment programme created with say a minimum of £600 per month but more paid off in better months?

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