Saffron Asset Finance provides Asset-backed lending to viable SME businesses
In the current Covid business climate, Tier-1 banks have become reluctant to support SMEs in the manner they did before the crisis impacted the economy. Saffron’s Asset Finance product can help businesses move forward from this difficult period and embrace growth in their market. The single greatest benefit of Asset Finance is that it provides a business with a method to acquire new machinery, plant etc in an affordable manner with payments spread across a reasonable period. This enables a business to move forward on its planning, to grow or increase efficiency and output.
Many SME business owners are concerned as they assess Asset Finance, they may not meet stringent criteria for lending. In particular, a business may not have a reliable credit history, for a number of valid reasons. Saffron understands each business is different and will assess each case on its merits.
Saffron seeks to provide flexibility in the lending arrangements it provides to its clients by understanding the client needs. The Saffron lending team has a deep knowledge of SME business operations and understands what a typical business needs to operate in-market, any seasonal trends it might have and adjust the finance repayments to suit, offering a much more flexible approach to lending.
We know that Asset Finance is attractive to SMEs because regular loan repayments are spread out over a fixed term. This in turn allows the business to plan its cash flows, frees up capital and enables a growth plan to be developed.
As typical loan term is between two to five years, since this is usually a timeframe that allows businesses to operate a full life cycle of equipment or machinery that is required for their operation.
Often SMEs that have more capital available up front often favour a Hire Purchase facility, because this enables them to pay the VAT component of the purchase price as part of their deposit and will then own the asset at the end of the repayment term.
SMEs which have cash flow constraints often favour leasing, as VAT is only payable on the monthly rentals over the term of the agreement, thus reducing the initial outlay.
Working with the experienced Saffron team will enable clients to have more control over the direction of their business. The Saffron team has wide experience across most sectors working closely with SMEs, advising them on the most appropriate type of finance whilst building a relationship and trust between the client and the lender.
Many other alternative finance options such as crowdfunding and P2P lending are platform based and the lender has no knowledge, underrating and empathy with the needs of the SME. Saffron is focused on building relationships with its clients over the long-term and these relationships are built on personal contact and trust.
‘Capital allowances’ refer to financial deductions available to UK businesses within their financial year and can reduce their liabilities on their corporation tax bill.
These allowances known as ‘Annual Investment Allowances’ are available on a variety of items of equipment, including plant and machinery and vehicles, so SMEs taking out certain kinds of asset financing can offset some of the costs incurred against their tax bill.
These allowances often change and it is recommended that a client speaks to their accountant or financial adviser for more information on this or look up information on the HMRC website.