If you have a passion for arts and crafts, you could turn that passion into a prosperous business if you’re up for it. Many people start out making small gifts at Christmas time and other seasonal events, which they sell to friends and family. Taking this concept to a higher level (for example, with a website that generates sales) is possible but you will need capital to make it happen. That’s what finance is for.
From making candles to watch straps, whatever it is you make this could work. You can borrow what you need from us over one to five years. The average cost to setup a crafts business is £10,000. You can do it for far less working out of your kitchen and selling on Etsy, but that isn’t a professional operation.
£10,000 might sound like a lot when you’re used to picking up materials for a few quid, but launching your own website costs a chunk. Ongoing marketing costs are very expensive, and you will need to hire an agency to manage this side of things because you can’t do everything. Your time will be invested in making products. If you attend fairs a lot of your time will be taken up travelling, and time is money.
We have helped a number of people take their passion for arts and crafts and transform it into a fully-fledged business. As a start-up, we can offer you specialist funding secured or unsecured to suit you. With an arts and crafts business, profits can be low so we will want to know how you intend to make it work.
We will ask to see your business plan and financial projections. We will also want to chat with you about your experience and what your business will do. Think of it as a character assessment. We basically want to know who we are lending to.
We are specialists in analysing business plans and comparing them to the state of the market sector to see which have real potential and which aren’t going to be able to return on investment. Providing we’re happy with your business plan, experience and drive, we’ll lend to you. We will also need to run a credit search on you. This is necessary to determine you are who you say you are and your credit history.
We can lend new businesses money unsecured or secured. Secured finance can be easier to obtain because you secure the amount against an asset. Unsecured funding carries higher risk for the lender so usually has a higher introductory interest rate. This will increase your monthly repayments. You must factor these into your business plan and financials when you apply for finance.
Moving into the real-world of business from selling a few things you make in your spare time is a big step up. Most people are up for the step but lack the finance to do it. If you’re in a similar position, talk to us. Call us on 01234 240 155 or email us at email@example.com to speak with our team about finance for start-ups. Thank you.
Bridging loans are a good way to raise a lot of cash quickly. If you need quick working capital, then a bridging loan could be suitable for you. These loans are used to bridge the gap between money going out and cash coming back in. This type of finance is short-term only, usually between six months and a year.
What things should you look for in a bridging loan? The first thing is the cost. Bridging loans can be compared by reviewing interest rates and factoring in fees. A lower interest rate does not necessarily mean a lower loan cost because arrangement and management fees can add significantly to it. Low fees are ideal and no fees at all preferable. The interest rate comes next. Up to 2% per month is normal.
Perhaps the most important consideration is the loan amount. Some lenders only deal in smaller amounts, say up to £50k, while others lend up to £500k. Those who lend small will be better suited to smaller businesses.
Next up you need to consider what LTV is achievable. Most lenders offer up to 75%. As a working example, what this means is if a lender is offering 70% LTV and you have £250,000, they will let you draw £175,000. Will this be enough? If you need more than the LTV offered, you may need to provide further security.
Will you need a second charge? A ‘first charge’ is secured against the primary mortgage or loan against the property. If you need to access more money further down the line, a ‘second charge’ can be secured against it. It is common for the second charge to have a lower LTV than the first charge. For example, where a lender offers 70% on the first charge, they may offer a 60% LTV on the second charge.
You will need an exit route. An ‘exit route’ is your plan to pay off the loan. All bridging loan applications require a viable exit route. Having a secure exit route in place is very important before taking out a bridging loan. The intention of an exit route is primarily to provide a route to repay the loan in the event of property sale. Lenders will review your exit route and will ask for further assurances where needed.
Short term only
As a short-term loan, bridging loans are not a viable long-term finance solution. They are more expensive than standard loans. When looking for a bridging loan, some flexibility is a must. If you need to extend by a few months or have the means to pay back sooner, having an understanding lender is beneficial. However, it is down to you to ensure your lender has a facility for extending the loan or drawing it off early.
Need bridging finance?
If you need a bridging loan, we’d be happy to help arrange this. Please call our team today on 01234 240155 or email us at firstname.lastname@example.org. Thank you.
Nationwide Corporate Finance is a broker. We arrange finance for you with our sister company. We do not lend directly, and that is what a broker does – they arrange finance for you and act as a helpful middleman.
The main benefit to using a broker is as so: the broker’s job is to work on your behalf and find the best possible deal. In other words, they do the research for you. Businesses who wish to borrow larger amounts will find a broker’s knowledge of lenders and products highly beneficial. Smaller amounts less so.
Now, the rise of comparison websites has gifted businesses the opportunity to do some research themselves. It is now easy to plug in a few details online (such as the loan amount and the term you wish to borrow it over) and get quotes back in minutes. However, comparison tools have a limitation – they only show a snapshot of the market. This is usually just who the lender is and their interest rate.
Brokers offer a greater scope of knowledge and the case for them is simple – the level of service and guidance they offer is way beyond that of a comparison website. For example, a tool cannot negotiate for you. It cannot process your application for you. Brokers can and so offer you a stronger position as a borrower.
You will also find brokers save you time. You only need one single application with a broker, versus filling out a new application with different lenders every time you want a quote. Your broker can provide a formal comparison of quotes too. This allows you to pick the deal that is right for you, which will be unique to your circumstances. Your broker may present a few finance options from a single lender or several.
Many brokers can compare finance products of all ilk’s, including hire purchase contracts, asset finance, asset refinance, tax loans, standard business loans, invoice discounting and more. A number of specialised solutions, such as invoice discounting, may be unavailable through traditional means so a broker is necessary for the introduction. For more standard types of business finance, such as loans, more lenders are available.
Something to keep in mind is different brokers tend to have different relationships with lenders. Some mostly work with high-street banks, some specialise in independent lenders and some have access to both. Some brokers are able to negotiate more favourable terms due to their past relationship with a lender. For example, we can negotiate excellent finance deals through our sister company.
In any case, your relationship with your broker will come to an end once the finance has been arranged and their fee is settled. Your relationship will then be with the lender. If you need to borrow again, using the same broker can have financial benefits. Some business owners reckon a good broker is as beneficial as having a good accountant. We’d say they are on to something.
The hire purchase agreement has become a very popular way for businesses to purchase expensive equipment on finance. It allows you to spread the cost of high-ticket items over a term that suits you with manageable monthly payments. Here’s 6 essentials you need to know about hire purchase contracts:
- Ownership position
With a hire purchase contract the legal owner of the equipment is the lender. As the borrower, you are the Hirer. This position remains the same over the course of the term until the end. Ownership passes to the Hirer at the end of the contract, which is to say once all repayments – including interest and any associated fees – have been repaid.
- Fixed or variable interest
A hire purchase contract can have a fixed or variable interest rate. A fixed interest rate means your monthly repayments will always be the same. A variable interest rate means your monthly repayments could go up or down (although the lender must always inform you of any change in good time). Most businesses prefer the certainly of a fixed rate over a long term and the lower cost of a variable rate over a short term.
- Easier to obtain than a standard loan
As a repayment facility hire purchase is usually easier to obtain than a standard business loan because the finance is secured against an asset that covers the value. However, only a select few specialist lenders, like us, offer it. Therefore to benefit from a hire purchase you may need to approach an independent B2B lender.
- Tax advantages
Hire purchase agreements come with two tax advantages. The first is the interest on repayments is tax deductible against your profits (please note this excludes vehicles such as cars and vans). The second is VAT is only payable on the rental, not the purchase price, so a reduced VAT liability is possible with hire purchase.
- Margin of finance
It is possible to borrow up to 90% of the value of equipment on a hire purchase contract and sometimes more with the right lender. The higher your deposit is, the less you need to borrow so the lower your monthly repayments will be. If you don’t have a bigger deposit then you may need to approach a specialist lender like us. Another option you have is an operating lease which keeps repayments down.
- Not keeping up with repayments carries two risks
Because you do not own the assets listed under a hire purchase agreement until you have repaid what is owed in full, if you go bankrupt or default on your payments, the lender can repossess the assets in question. Communicating with the lender can put you back on good terms, but there is also a second risk.
The second risk associated with a hire purchase also stems from not keeping up with repayments – a damaged credit profile. If you miss any payments then these are automatically logged in your credit history, which may damage your credit score and make obtaining credit in the future more difficult.
Websites cost a lot of money to build. Whether they’re on WordPress or a custom CMS, designed from scratch or based on a theme, the design time and development time that goes into them is extensive. Time is money so the best agencies and freelancers command a handsome fee to get the job done.
For many companies a website is an essential part of their business. Think eBay, Amazon, and Just Eat. For others, a website is necessary to increase market reach. Think high-street retailers like John Lewis and House of Fraser. Sometimes, a website is simply a virtual business card with a phone number on it. Think plumbers and carpenters. Whatever the case, a website is an invaluable medium for most businesses.
We can secure the funding you need to build your new website. Quite often, businesses set a budget for their web presence which is unrealistic. Also quite often, business owners get a shock when they get their quote through.
It’s as simple as this – we can secure you the funds you need to build a website that would otherwise be out of your reach. If you can only afford silver, we can help you afford gold and invest in the website you really want.
Website build costs
The following costs are typical with design agencies:
- To build a 5-10-page service website on a WordPress theme with some graphic design and customisation, budget £1,500 to £3,000.
- To build a 5-10-page service website with a custom build (where the design and development is from scratch), budget £3,000 to £5,000
- To build a medium-sized e-commerce store using a pre-made theme on WordPress with WooCommerce integration, budget £4,000 to £7,000.
- To build a medium-sized custom e-commerce store on Magento or WooCommerce, budget £10,000 to £30,000.
- To build a large, custom e-commerce store (such as that on John Lewis, Argos or Currys) with a premium agency, budget £30,000 to £100,000.
- The cheapest option is to build and maintain a website via the DIY route. This is where you do it yourself. There are several website builders out there that enable you to build a website without any technical experience. They aren’t custom but they do get the job done. And should you need a custom element or two, you can hire a freelancer on an hourly rate.
If you need a custom job, costs increase as development time does. The bigger the site, the more products that need adding and the more time it takes to test everything. The cheapest sites to build are service websites because they don’t need a checkout, cart system or payment integration. However, this assumes no custom coding. Where custom elements are built, development fees increase exponentially.
It’s important to approach the process in funds so you have what you need to get started. If you have been quoted a price that’s out of your reach, we can help you secure the funds you need. Call us on 01234 240155 for a friendly chat with our loan team.
In November last year, it was reported by media outlets that HMRC had written to businesses and people with outstanding debt suggesting they should take out a loan to pay what they owed. This raised a lot of eyebrows.
But the simple fact is the penalties for filing late corporation tax returns are high and often work out higher than the interest on a tax loan.
Late return penalties
HMRC issues a penalty if you file your CT600 late.
The penalty for filing a corporation tax return 1 day late is £100. After three months, another £100 is added to the penalty. After 6 months, HMRC estimates your corporation tax bill and adds a penalty of 10% on the unpaid tax. After 12 months, HMRC again estimates your corporation tax bill and adds another 10% onto the unpaid tax.
Late payment interest rate
HMRC will also charge your company interest if you do not pay your corporation tax bill on time or if you do not pay enough. The current interest rate is 3.25% as of Jan 2019. You can keep up with changes to HMRC interest rates here.
Compared to most commercial loans, that interest rate is low, however when you add the penalties above onto it the true cost of late filing is higher.
Paying up with a commercial loan
There are two sides to paying HMRC with a loan. The first is you get to settle up, clear the slate and put your business on the right side of the law. For many business owners, this will be reason enough to take out a loan. It releases the pressure.
The second side to it is saving money. You will be charged £100 if you file your CT600 late and another £100 3 months later if you still haven’t filed it. 10% of your tax bill is then added at 6 months and another 10% at 12 months. As you can see, these costs spiral and if left unchecked can make paying up unaffordable.
Making sense of the cost savings
So, let’s say you take out a business loan with a 5% fixed interest rate. Whatever amount you borrow, you know how much the loan will cost – 5% on top of what you borrow. This is higher than HMRC’s interest rate, but not when you add the penalties.
Here’s an example: your corporation tax bill is £10,000. Borrowing £10,000 over a year at 5% will cost you £266.84. That’s the total cost of the loan (pure interest). HMRC would fine you £200 and up to 20% of your corporation tax bill in that time. The total charge from HMRC would be £2,200 – £1,933.16 more than the cost of your loan.
The bottom line is if you cannot afford to pay a large corporation tax bill such as that in the example above, late payment is a real prospect. You should weigh up your options to make a swift payment and a tax loan is one option you have.
If your business is in need of new equipment, you don’t necessarily have to finance the purchase out of your own pocket in one go.
We offer a range of specialist finance products with a low interest rate which allow you to spread the cost of a purchase over a term that suits you. Agreements run from 12 months to 5 years, so they are suitable for the short or long-term.
Why would you want to take out a hire purchase agreement with us? Because our interest rates are as low as 4% which is significantly lower than most suppliers – and that’s even if they offer a repayment plan in the first place. Most manufacturers certainly don’t, and so finance from us is often the only solution to getting new equipment.
Hire purchase agreements let you bring new equipment into your business while keeping your monthly payments as low as possible. The way they work is simple: You pay us a set amount every month to ‘hire’ the equipment, and come the end of your agreement, you will own it outright so long as your agreement is settled in full.
At the end of your agreement if the equipment is valuable and if you like, you can also refinance your equipment to release more cash. This is a good way to access cash because it usually yields a lower interest rate than a standard loan.
Getting started with a hire purchase
Whoever you choose to take out a hire purchase with, the lender needs to know what the goods are and their value. Depending on the lender in question, they may also require a deposit to lower the LTV. For example a 5% deposit. This is not always necessary though and we certainly don’t request it as a condition.
The most important thing to look for with a HP is the interest rate. This determines the total cost of the loan over your term.
For example, a hire purchase value of £11,000 borrowed over 3-years at an interest rate of 4% would cost you £678.76. Bump the interest rate up to 6% and the total cost of the HP rises to £1,018.60. The above example assumes no additional fees. Because hire agreements are not a loan, they do not have an APR.
At Nationwide Corporate Finance we have helped hundreds of British businesses invest in new equipment and machinery with a hire agreement. From bakery shops and car garages and CNC machining firms to glassmakers, a wide range of businesses have benefited from our finance products and financial expertise.
We recommend a hire agreement first and foremost if you wish to own the assets in question at the end of your term. Crucially, we can help you finance equipment that would otherwise be out of your immediate range. Think gold when you can only afford silver. This is the key benefit a hire agreement offers and borrowing over 12 months to 5 years means repayments are flexible and affordable.
The best restaurants create that perfect dining experience – where the food is otherworldly, the service first-class, the ambience perfect, and where the restaurant itself is a well-polished and relevantly-appointed affair. Customers remember and recommend those that deliver a great experience. That’s a fact.
Be it an American diner or Michelin star restaurant, restaurateurs agree creating a memorable experience is the key to success. At the highest level, every detail is scrutinised by customers, which is why the best restaurateurs spend big money on fixtures and fittings for their place. They want to create a perfect atmosphere — and quality tells. This is a world where crystal rules and faux needn’t apply.
Financing high quality fixtures and fittings is very expensive though. Have you seen the price of a crystal chandelier? At the high end of the market, you can quite easily blow thousands on candle holders and mirrors. Need some bespoke fittings, such as iron wrought or woodwork/ carving? Expect to pay a pretty penny. Which is why we offer finance especially for restaurants who want the very best fit out.
We have helped restaurant owners and chains across the UK buy fixtures and fittings for restaurant modernisation, rebranding, new builds and franchising. Whatever you’re up to with your restaurant, we can help you too.
If you want to borrow money to fund the splurge for your restaurant, what you want is a standard business loan. We can offer you two types: an unsecured loan up to around £30k or a secured loan for up to £500k. We can sometimes lend even more unsecured, it depends on your business (its health and status).
Fixtures and fittings finance is a fine way to fund your fit out. The last thing you want when shopping is to be constrained by the balance in your account. By borrowing a set amount, say £20,000, you will have that amount sat and waiting in your business account for your debit card to use as you please. There’ll be no faffing around waiting for money to come in – it will be there to use. It’s as simple as that.
Borrow what you need over a term that suits you. With Nationwide Corporate Finance, you can borrow over one to five years. We always say you should borrow over a term that makes the repayments comfortable for you. Most customers choose to repay their fixtures and fittings loan over 3 to 5 years. 60 months is the norm. We work with our sister company to arrange competitive finance for all industries.
To get started, check your eligibility for a loan by using our online eligibility tool, and if that checks out, we have an easy to use online application form. Alternatively, you can apply on the phone by calling us on 01234 240155. Call us and we’ll be happy to discuss finance for your restaurant. We offer a same day decision, funds in 24-hours and market leading interest rates. A triply good combination for your business.
Can you top up a business loan? The short answer is yes, you can, but your ability to do so depends on your lender. Some B2B lenders will let you borrow more money for your business by topping up your existing loan, but others require you to take out another loan separately — which means going through the loan process again.
If you may need to access more funds in the near future, it therefore makes sense to shop in the first place for a lender who allows top ups.
The lender we work with DOES allow loan top ups. We can’t speak for other lender’s policies, but we can cover our own. The following information then will help you decide if borrowing more with a business loan top up is worth it.
Is a top up worthwhile?
The benefit to topping up your existing business loan is one of convenience. You won’t be subjected to the same loan application criteria. If you are eligible to top up, often all that is needed is a check of your finances and credit history. The latter is necessary to determine if you are still creditworthy, post your original agreement.
How much can I top up by?
Providing you have a good history of keeping up with your repayments, you can top up a business loan by as much as 50%. Some lenders allow you to top up by 100%. It depends on the lender, but 50% is typical for business loans.
How does it work?
In a different way than you probably expect. When you top up a loan, the lender doesn’t actually add new money to your loan. Instead, they write you a new loan that pays off the old loan. A new agreement is therefore created. The new loan pays for the old loan, including any repayment charges, and advances you a new lump sum. The process is simple, but your repayment term and monthly payments will change.
Is there a financial penalty?
Because topping up a loan involves setting up a new loan that pays off the old loan, depending on your lender, an early repayment charge may be added onto the top up. This is usually equivalent to one to three month’s interest. If your lender doesn’t charge an early repayment fee (for example, we don’t) then there is no financial penalty. However, you will have higher repayments each month because you are borrowing more.
Why will my repayments increase?
For the simple reason you are borrowing more money. Lengthening your loan term will reduce your monthly repayments if you want to keep your monthly expenses down, however this will lead to you paying more interest over the total term. Another reason your loan repayments can increase is because your new loan may have a higher interest rate than your old loan. This can make topping up less affordable than choosing a new loan with a different lender, so it is always worth shopping around.
Whether you visit a lender’s website directly or see an advertised interest rate on a comparison website, there’s something you need to know – the actual interest rate offered to you will be dependent on an assessment of your circumstances. Which is to say you are not guaranteed the advertised interest rate.
When an interest rate is advertised, all it means is some customers receive that interest rate. In the case of ‘representative APR’ what this means is at least 51% of applicants are given the advertised APR. In the case of a ‘representative interest rate’ there is no golden percentage, but it would be reasonable to assume more customers than not get the interest rate advertised. Otherwise it would not be fair to advertise it.
So, if you have applied for a loan only to be offered a higher interest rate than what is advertised, now you know why lenders can do that. But exactly why they offered you a higher interest rate depends on a variety of factors. We will look at these below. Also – if you have been offered a poorer interest rate than you thought, you might have better luck elsewhere. Our interest rates start from 3.6% per year.
“An assessment of your circumstances”
When lenders say the interest rate offered to you will be based on an “assessment of your circumstances” what they actually mean is if you have a good credit score and history, then you will probably get the advertised rate. If you have a less than ideal credit profile they can turn around and say “no, your rate will be higher”.
The reason is risk. Businesses and directors with an imperfect credit profile are deemed higher risk and a higher interest rate is offered to reflect the fact. It’s a way for lenders to mitigate risk and maximise customer value.
Bringing fairness to the decision process
Most “assessments” (especially those conducted by high street banks) are carried out digitally without human input. What this means (aside from a very strict loan application criteria) is you will probably be offered an interest rate by an automated system that spits out a number based on your credit profile.
A fairer system is one where a human being reviews your business loan application and credit profile in person. This makes a big difference because some objectivity enters into the process. So rather than just offering the best advertised rate to those with an excellent credit score, it can be offered to those with an average credit score if, for example, they can show a recent history of responsible borrowing.
It’s not always possible to offer the advertised rate to those with imperfect credit profiles, but by reviewing applications in person it makes the process fairer which in turn makes it a more likely scenario. That is why we review business loan applications in person – and while we can’t guarantee our advertised interest rate, we’ll always try hard to match it.