FIDUCIA’S COMMERCIAL FINANCE SOLUTIONS

 

A Guide To Our Range Of Commercial Finance Solutions For Trading Businesses From All Sectors, Property Investors and Developers.

Fiducia Commercial Solutions can source a wide range of commercial finance options for your company in products under headings like Commercial Property, Investment Property, Development Finance and Business Finance – but what does that mean in practice?

Gone are the days of approaching your bank (as your only option) and choosing from the menu items of: Overdraft – Loan – Mortgage.

To source the best outcome for your requirements, and a suitable solution for you, we use a whole of market panel of lenders:

•       High Street Banks
•       Challenger Banks

•       Product Specialist Lenders
•       Peer To Peer

•       Fintech

Some of our lenders you may not have heard of, some only deal with commercial brokers and some of their products and rates are exclusive to the commercial broker channel.

This is a guide to the commercial finance solutions that Fiducia can access for clients – we can of course go into more detail when talking through their suitability for your business, and your eligibility for the lenders’ criteria.

Many can be used to manage and conserve cash flow, and to help you trade out of the current environment or manage demand in ways that you may not have previously thought about.

Commercial Mortgages

Commercial Mortgages are used to fund the purchase, or refinance of, commercial and semi- commercial properties. In general terms, there are 2 types of Commercial Mortgages:

•       Owner Occupied - The purchase or refinance of the property where the company is currently operating, or the purchase of a new property to move to and operate from.
•       Commercial Investment - The purchase or refinance of commercial or semi-commercial property which will be rented to another company to operate from – essentially a commercial Buy To Let.

Residential Investment / Buy To Let

An investor may purchase, via a limited company (“Special Purpose Vehicle” or SPV), an investment property as part of a long-term investment strategy. These range from a single property to building a portfolio of properties, BTL's to HMO's and MUFB's.

Bridging Finance

Short-term property finance with faster completion compared to traditional mortgage finance; the ‘Exit’ from the loan is commonly the sale of the asset, or long-term re-financing.
Multiple uses: auction purchases / requirement to purchase quickly / refurbishment and development periods / releasing equity to raise working capital.

Development Finance

Finance terms available vary according to the initial value of the property / land, the costs and fees of the development work, the projected value of the completed development and your previous experience of development. Variants include:

•       Light Refurbishment - Cosmetic refurbishment with no structural changes.

•       Heavy Refurbishment - Contains cosmetic work, but usually renovation work including structural changes or changes to the footprint of the property.

•       Ground Up Development - Commonly starts from vacant land, can include demolition and rebuild projects.

Recovery Loan Scheme

Open For Applications to June 30^th 2022 - The scheme replaces the government's original business support loan schemes - Bounce Back Loans, CBILS and CLBILS:

•       Term Loan funding starts at £25,001, up to 6 year terms

•       Invoice and Asset Finance starts at £1,000

•       Commercial Mortgages, Investment Mortgages and Bridging Loans also available under the RLS

The scheme is limited to £10m per company, or £30m per group

Business Loans

•       Secured Loans - The lender takes a guarantee to back the loan, which is normally a tangible asset that a company owns like property, machinery or vehicles.

•       Unsecured Loans - With no tangible security backing the loan, these are riskier for lenders – and this is normally reflected in a shorter term and higher interest rate.
•       Revolving Credit - Similar to an overdraft, you agree a facility limit and term and can ‘dip in and out’ depending on your needs. You only pay interest on the funds that you draw down.
•       Merchant Cash Advance (MCA) - Using the regular income from Debit / Credit Card transactions to help fund business borrowing, helping to smooth income in seasonal markets. No fixed loan repayments, your repayments are tied to the volume of business you take through card transactions.
•       Short Term VAT Loans - Lenders offer 12 week loans to help to settle some or all of your VAT bill – you can repay weekly or monthly.

Invoice Finance

•       Invoice Discounting - The simplest form of invoice finance. You keep charge of credit control, and get paid up to 90% of your invoice’s value on the day that you issue it to your customer, with the balance when they settle.

•       Invoice Factoring – As per Invoice Discounting, plus the lender manages your credit control - this can free up your time to get on with running the business.

•       Selective - You select either the clients or the individual invoices to put into invoice finance, so you only use the facility when your cash flow requires it.

•       Specialist Sector? - Construction Finance, Recruitment Finance and Professional Services Finance are just a few examples of specialist products that could be tailor made for your sector.

Trade / Supply Chain Finance

Trade / Supply Chain Finance is a revolving facility that can be with UK based suppliers and manufacturers as well as overseas, is flexible to accommodate deposits if required on order and other costs including import VAT and freight if these are applicable to you. And if it is from overseas, then lenders are also commonly experts in FX as well.

Asset Finance / Vehicle Leasing

Asset Finance gives your business access to the machinery, plant, equipment or vehicles that it needs to operate, without the full initial outlay of their cost. It can also release value from assets that you already own towards working capital and cash flow requirements:

•       Leasing Finance - Your business doesn’t own the asset but agrees a lease usually for a fixed term and payments. You are in effect renting the asset.

•       Hire Purchase (HP) - This allows your company to purchase an asset over an agreed term with agreed regular payments – the asset is yours when all of the agreed payments have been made.
•       Refinance - In simple terms, your company may own assets that are either unencumbered or partially financed. Lenders will commonly lend up to 70% of their current value less any outstanding finance.

From April 1 2021 for 2 years companies can offset 130% of qualifying spending on plant and machinery against their taxable profit in that first year under the Super Deduction tax relief scheme. Take your accountant’s advice for your business, but it could be worthwhile re- considering plans that had been shelved during the pandemic, or bringing forward plans?

We are sourcing suitable Commercial Finance solutions for trading businesses from all sectors, property investor and developer clients, to help them achieve the best outcome for their requirements.

Why not see what options are available to you?

Mark Grant, November 2021.

mark@fiduciagroup.co.uk

Changing Business Bank Relationship – Benefits Can Outweigh The Effort To Move

 

Talking to clients I have seen and heard the reluctance, dread and even fear at the thought of moving their business banking relationship from one provider to another. If you don’t understand what it involves, how much is taken care of for you and how many benefits there could be for you, then it is an understandable reaction.

Banks may be surprised (and I hope would care) about the number of people dissatisfied with their existing relationship, and the service levels and finance solutions that they are currently provided with.

With business banking we are not talking about someone interested in a £50 cash back incentive for moving their current account – the service and access to suitable finance solutions, all in a friction free way for the company, makes an enormous difference to their productivity, and in a lot of cases sanity!

As we hopefully continue to move away from the pandemic period, raw in businesses’ minds are the early days of Covid-19; 6 hours on hold to talk to ‘anyone’ at their bank – to get picked up and a ‘call back’ booked in for a few days later – which never materialised.

Those few days and beyond could well have been spent with their business closed, no money flowing in and not just themselves but staff to worry about and look after.

Ok, so the loan schemes came in, some businesses started to open back up and the rest we all know – but when they needed their bank the most, the bank was not accessible. This has left a big mark on many businesses.

There are some great Relationship Managers in business banking, who know their clients well and have worked with them in some cases for many years. But many decisions that affect their clients – limits, facilities or just support as a whole – are taken ‘above their pay grade’ by risk teams and committees not connected with the business.

In a time of wholesale changes in banks’ appetite and criteria for funding UK business, your Relationship Manager is no longer able in most cases to hold sway on many decisions that affect you.

I want to touch on a case study of a company that we helped to move their corporate banking relationship and some other areas that may be a catalyst for you to consider moving business banking.

Case Study

We worked with a manufacturing client, and helped them to move their business banking from one high street group to another. The facilities moved over were:

•        Core business banking
•        Invoice Discounting facility
•        Commercial owner-occupier mortgage
•        A CBILS loan

With the benefit of hindsight the company suffered no defaults on their debtors book, but in the heat of the worst early months of the pandemic they did suffer late payments – but were in open and frequent dialogue with their clients about the situation.

Their incumbent bank operates a system driven ‘auto-adjustment’ so that if their day count for payment pushed over their 90 day limit, without any human intervention the system automatically reduced their pay rate on invoices by 1% for every day the day count was exceeded.

And so in May 2020, when their day count pushed 14 days over their limit, the system immediately reduced their pay rate on invoices to 76% from 90% - the day before payroll, and with no warning.

The MD funded the payroll 1 day late, but everyone got paid. The bank repaid the funds and lifted the pay rate back to 85% within a week – but understandably the damage was done. Is this the issue with reliance on tech-driven decision making and an account manager having 90-100 companies to look after?

The story ended well for the business, and they are now with a bank that works with clients on far reduced ratios of account managers to businesses, and talks to clients before any actions are agreed with them.

They did not raise any more funds by moving – but the banking now helps their business work better – even an improvement in bank portal and connectivity with accounts package has given them time back to get on with running the business.

What Benefits Could You Gain From Moving Business Bank?

A bank that listens: And this isn’t a shameless plug for the ‘listening bank’! Some clients are facing a wall of indifference to their current situation and path to recovery from Covid impact. ‘We are not a story book banker’ has been quoted to one client…

A bank that supports what you need: You may have a facility or type of finance that your bank just does not want to support post-Covid. A good example of this is Invoice Finance, and in several cases Invoice Finance for sectors like Construction and Project based work, where there is contractuality to client agreements.

Online access and connectivity that gives you time back: Anyone that runs a business can tell you that their most precious commodity is time – what could they do with more of it in terms of productivity and more time to run their business? The way that you business bank connects with you, offers you access to your finances and funding, and expects you to interact on issues likes monthly reconciliations can make a BIG difference to you as an owner or director of a company.

You ‘pivoted’ to trade out of Covid – but your bank hasn’t pivoted with you: Many businesses had to adapt, change or add completely new areas of business to get through and trade out of the pandemic – and so while your bank may have supported your previous activities, it doesn’t cover everything that you do now.

For example, you always used couriers but now you make so many deliveries that you need your own vans – but your bank doesn’t provide Asset Finance.

So, Where Do You Start?

All of the finance that we source is impartial and with no ties to any particular lender at all. The same is true of our ability to fit your business, your banking requirements and your aspirations moving forward with all of the facilities open to you with another bank to your existing business banking relationship.

Where do you start? With a conversation with us – to discuss what you have in place, what you are not getting that you want from your existing bank / what the problems are – and what you see your best outcome as looking like.

Because we know what is available from business banking providers, and how it can potentially be packaged for you, we then do the legwork and present options that are suitable. Leaving you to get on with the important job of running your business.

 

From our first conversation forwards, you will get the support and reassurance that you are not having to manage the process on your own – and that everyone is working to the same end goal – the best possible outcome for your business.

Your business may really benefit from a business banking move – why not invest a few minutes in a conversation with us today to discuss how?

Mark Grant, November 2021.

mark@fiduciagroup.co.uk