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    Finance

    2021: a year of opportunity?

    • By Editor
    • January 30, 2021
    • 4 minute read

    Many of us are looking forward to 2021 with more optimism than they may have felt just six months ago and the Close Brothers Asset Finance Business Sentiment Index shows that manufacturers’ positivity is now on a par with 2018 levels.   

    But, old issues remain – our latest research of UK SME business owners reveal three-quarters of manufacturers admitted their cashflow was causing them significant stress. Despite this, the same number were planning to seek funding for business investment in the coming 12 months.

    So, what does this tell us? It says manufacturing firms can see the opportunities available to them but are not disregarding the issues they are facing today in light of the difficulties brought on by the pandemic, including maintaining and protecting cashflow.

    Options

    When the cash tap is turned off, as it was for many during the Covid-19 crisis, the options available to business owners can appear to be stark – pull down the shutters and maybe start again when, or if, things return to normal. Additionally, you can go to your lender and ask for a payment holiday or apply for further loans to cover costs and hope for the best. Or, you could take a step back and look to your physical business assets and prove their worth in ways you may not have thought possible.

    For many years, during good times and bad, business owners have increasingly turned to asset finance to help them maintain cash flow. But what is asset finance? In short, it’s an alternative form of funding used by businesses to obtain the equipment they need to grow or access much-needed cash. Asset finance makes the otherwise unaffordable affordable. This is because it gives businesses access to the equipment they need without incurring the cash flow disadvantage of an outright purchase. Agreements can also be customised to the business needs, with flexibility on both the term and repayment schedule.

    There are various products that come under the broad umbrella of asset finance with one of the key ones being ‘re-financing’ or ‘capital release’, as it’s also known. It is a proven way to make your assets work for you and release cash back into the business.

    It’s pretty straightforward and works by the finance company purchasing the asset and financing it back to you, with repayments calculated in line with the income the asset is expected to generate; at the end of the refinance term, you own the asset.

    This offers several great benefits to a business that just needs a cash injection, whether it’s for investment in additional business-critical assets or to use in other areas of the business, including unexpected bills and invoices, salaries, VAT payments, diversification – the uses are almost endless.  We can also look to take over a finance agreement with another provider and extend the term, ultimately reducing monthly payments and easing the pressure on cash flow.

    Case study

    We recently provided specialist designer and manufacturer, Brand Consortia, with a term loan backed by CBILS to help the business through the COVID-19 period, putting them in a positive position once site working is deemed safe again.

    Based in Oldham, Brand Consortia was established in 2010 and specialises in the design and manufacture of signs and graphics for high-profile customers. Prior to the COVID-19 outbreak, the business was on track to post a record year; however, the bulk of their order book was postponed for a minimum of eight weeks because of the outbreak with the main source of work postponed.

    The directors approached us for forbearance on their existing agreement, which was granted. They also needed a cash injection to provide working capital and help cover the new costs associated with adapting to social distancing measures in their manufacturing facility. The funds will provide the working capital they require to trade out of the pandemic.

    For more information about Close Brothers Asset Finance visit www.closeasset.co.uk

    https://cdn.mtdcnc.global/cnc/wp-content/uploads/2021/01/30224342/IMG_0195-640x360.jpg

    2021: a year of opportunity?

    Many of us are looking forward to 2021 with more optimism than they may have felt just six months ago and the Close Brothers Asset Finance Business Sentiment Index shows that manufacturers’ positivity is now on a par with 2018 levels.   

    But, old issues remain – our latest research of UK SME business owners reveal three-quarters of manufacturers admitted their cashflow was causing them significant stress. Despite this, the same number were planning to seek funding for business investment in the coming 12 months.

    So, what does this tell us? It says manufacturing firms can see the opportunities available to them but are not disregarding the issues they are facing today in light of the difficulties brought on by the pandemic, including maintaining and protecting cashflow.

    Options

    When the cash tap is turned off, as it was for many during the Covid-19 crisis, the options available to business owners can appear to be stark – pull down the shutters and maybe start again when, or if, things return to normal. Additionally, you can go to your lender and ask for a payment holiday or apply for further loans to cover costs and hope for the best. Or, you could take a step back and look to your physical business assets and prove their worth in ways you may not have thought possible.

    For many years, during good times and bad, business owners have increasingly turned to asset finance to help them maintain cash flow. But what is asset finance? In short, it’s an alternative form of funding used by businesses to obtain the equipment they need to grow or access much-needed cash. Asset finance makes the otherwise unaffordable affordable. This is because it gives businesses access to the equipment they need without incurring the cash flow disadvantage of an outright purchase. Agreements can also be customised to the business needs, with flexibility on both the term and repayment schedule.

    There are various products that come under the broad umbrella of asset finance with one of the key ones being ‘re-financing’ or ‘capital release’, as it’s also known. It is a proven way to make your assets work for you and release cash back into the business.

    It’s pretty straightforward and works by the finance company purchasing the asset and financing it back to you, with repayments calculated in line with the income the asset is expected to generate; at the end of the refinance term, you own the asset.

    This offers several great benefits to a business that just needs a cash injection, whether it’s for investment in additional business-critical assets or to use in other areas of the business, including unexpected bills and invoices, salaries, VAT payments, diversification – the uses are almost endless.  We can also look to take over a finance agreement with another provider and extend the term, ultimately reducing monthly payments and easing the pressure on cash flow.

    Case study

    We recently provided specialist designer and manufacturer, Brand Consortia, with a term loan backed by CBILS to help the business through the COVID-19 period, putting them in a positive position once site working is deemed safe again.

    Based in Oldham, Brand Consortia was established in 2010 and specialises in the design and manufacture of signs and graphics for high-profile customers. Prior to the COVID-19 outbreak, the business was on track to post a record year; however, the bulk of their order book was postponed for a minimum of eight weeks because of the outbreak with the main source of work postponed.

    The directors approached us for forbearance on their existing agreement, which was granted. They also needed a cash injection to provide working capital and help cover the new costs associated with adapting to social distancing measures in their manufacturing facility. The funds will provide the working capital they require to trade out of the pandemic.

    For more information about Close Brothers Asset Finance visit www.closeasset.co.uk