Finance & Leasing
Transforming your business
Buying, borrowing, leasing... what are your plans for the expansion and update of your business? Vending International reports A
sset finance is used to obtain equipment, and can be an ideal solution for vending operators who, in order to continue to grow their business, need new equipment which would otherwise be unaffordable. Borrowers pay a regular charge in exchange for
use of the asset over an agreed period of time, thereby avoiding the full cost of buying outright. The Finance and Leasing Association (FLA) is the industry body for
the asset finance, consumer finance and motor finance sectors. It advises: “Because [asset finance] loans are secured wholly or largely on the asset being financed, the need for additional collateral is much reduced and there is more security for the user because the loan cannot be recalled during the life of the agreement. Asset finance also offers ultimate flexibility because businesses have the option to replace or update equipment at the end of the lease period.” The third most common source of finance for businesses after bank overdrafts and loans, it provides significant cash flow and tax benefits for those using it. It helps cash flow and frees up capital, which is essential for small to medium sized businesses. “[SMEs] play a key role in our economy, employing almost 60% of
the private sector workforce and accounting for almost half of all private sector turnover,” said Keith Morgan, chief executive of the British Business Bank. “Their continuing success is vital to building the UK economy. Being able to access the right type of finance at the right time allows these businesses to invest, grow and create jobs. A good understanding of the options available is an essential starting point and enables businesses to select the type of finance that is right for their circumstances and plans.”
THE GROWTH OF P2P Peer-to-Peer (P2P) Finance is a form of lending in which internet- based platforms are used to match lenders with borrowers. It gives those with money the opportunity to put it to work for competitive returns through lending to other individuals or businesses online. “Peer-to-Peer Finance is bringing much-needed new competition and choice to the banking market in the UK, providing funds to
creditworthy individuals and businesses,” said the Peer 2 Peer Finance Association (P2PFA) a self-regulatory body promoting high standards of conduct and consumer protection in the sector. Through peer-to-peer lending and invoice finance platforms, businesses and consumers can ‘rely on each other’ for lending and borrowing services, providing lenders and investors with attractive rates of return, and credit worthy borrowers with competitive access to finance.” “P2P business lending can often be more quickly arranged [than a
traditional bank loan] and it will also allow partners, customers and friends and family who invest through the platform to share in the returns of the business,” advised the ‘The business finance guide’, published by world leading accountancy and finance membership organisation ICAEW. “The minimum loan size is very small, which encourages a wide range of lenders to participate, and the maximum loan size of P2P business lending is growing.” Pioneered in the UK in 2005, as of 2014, P2P platforms have enabled lenders to provide over £1.2billion of funding to UK consumers and businesses, according to the P2PFA. It expects the sector to continue to double in size every six months going forward. With machine technology improving at a rapid rate, vending
operators need to ensure they update their equipment in order to compete with high street coffee and snack retailers. Having adequate financial support is essential for business growth.
KEY STATISTICS FROM THE FLA* • 27% of all UK investment in machinery, equipment and purchase software is funded using asset finance
• Approximately 2,500 new asset finance contracts are signed daily
• There is a 91% success rate when SMEs apply for asset finance
*2014
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