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Our Service to You

Clarity Business Finance has a range of solutions for most commercial funding requirements. We are able to assist with the following:-

Asset Finance - Purchase and refinance of your plant, machinery, vehicles & trailers
Commercial Vehicle Finance - Whether it’s one vehicle or a whole fleet
Invoice Finance - Factoring & Invoice Discounting Facilities
Commercial Loans - Secured & Unsecured Business Loans
Commercial Property Finance - Commercial Mortgages, Property Development & Bridging Loans

The information below gives a more in depth explanation of these solutions.

Plant & Machinery Asset Finance

Investing in new equipment is an investment in your business. There are several variations of finance designed to suit your business.

Hire purchase: Straightforward asset funding that guarantees ownership at the end of the repayment term. VAT is usually paid in full, in advance and the remaining monthly payments are fixed.

Finance lease: With finance lease you can spread your VAT costs over the monthly repayments to improve your cashflow. There are also ownership options at the end of the repayment period, should you require. Finance lease offers accelerated tax relief and can be more tax efficient when compared to Hire Purchase.

Refinancing assets: We can provide asset refinancing on your plant & machinery or vehicle & trailer fleet that releases essential capital back into your business.

Sale & leaseback: In most cases, if your business has paid in cash for new equipment and the purchase invoice is less than 3 months old we can arrange for the purchase price to be refunded back to you. The lender will take ownership of the equipment for you, for an agreed term.

REASON FOR LOAN

Buying new equipment
Buying second hand equipment
Refinancing current equipment

Hire Purchase

Hire Purchase is a simple way to purchase an asset and spread the cost over time. You pay an initial deposit followed by monthly instalments, which means the asset appears on your balance sheet, and because you own the asset you'll be responsible for maintenance and insurance costs — but you'll also have full ownership of the asset after the term ends and finance repaid.

Finance Lease

If cashflow is a priority for the company, paying a deposit along with the VAT upfront can be difficult. Again, payment is made with regular payments to an agreed schedule and you pay VAT on the rental payments, not the purchase price. Finance lease differs from some other asset finance in that the business is only ever renting the assets concerned This normally lasts until the finance provider has recouped the purchase value of the asset. In some instances the finance company may allow the business to share in a percentage of the sale value of an item once it has been sold. The business does not have the option to purchase the asset outright.

Tax-wise, it may be possible for a business to offset the rental payments against their profits. The finance company retains the right to any capital allowances, but the business can reclaim VAT.

Asset Refinance

Asset refinancing is the process of securing a loan against valuable items that your business owns outright or even partially owns, usually vehicles or equipment.

Because you’re effectively ‘unlocking’ cash, the amount you can borrow depends on the value of the assets involved (usually between 70% - 80%). Asset refinance lending is sometimes used for debt consolidation, additional working capital, business purchases or maybe even property deposits.

As an example, a business has an item of machinery valued at £15,000 that they are currently financing under a hire purchase agreement. They have some £2,500 left to pay on this agreement. Consequently, they can gain asset refinancing against this asset (70% - 80%) The original HP agreement is repaid from the new agreement with the remaining proceeds being paid to the business.

Once the refinancing has been agreed, the business makes regular repayments over an agreed period to repay the loan with interest.

Operating Lease

Operating leasing tends to be used for specialist equipment or machinery that the business may not want to use for the full duration of the useful life of the asset or has no interest in buying permanently.

Operating leasing is basically renting an item over a short or medium term, with rental costs based on the length of time the asset is required. This type of financing is often cheaper than equipment leasing because the business only pays for the calculated value of the item over the limited lease time agreed.

There is no depreciation risk as the agreement is purely rental so the asset is not on your balance sheet. This means your gearing will not be affected and you do not have to worry about a resale value at the end of the agreement as you hand the equipment back.

Commercial Vehicle Finance

Commercial Vehicle Finance is a collective term that is used to describe finance products aimed at funding the acquisition of either new or used vehicles or fleets. These may be cars, LCVs, HGVs, Trailers or even construction vehicles dumpers, tippers etc.

Commercial vehicle financing is a convenient way to purchase a car without having to put down a large down payment or buying the car outright. Although you don’t own the car, you can use your car as an asset for your business. If you decide to take out finance on a new car, you can specify how long you want to hire the car for.

We offer three core finance products, all of which can be tailored to suit your specific vehicle purchase. If you are looking to purchase your next commercial vehicle or dream car then a hire purchase or finance lease option may be the best choice. Owners interested in unlocking capital in their vehicles can opt for an equity release type agreement. Stuck in a high-rate, uncompetitive agreement? – a refinancing agreement may help you lower the rate and monthly repayments.

Hire Purchase

Hire Purchase offers a straightforward way to spread the cost of your new vehicle. You pay a fixed rate of interest and benefit from fixed monthly payments, making budgeting simple and easy.

You choose the amount of deposit you wish to pay, typically between 5%-50% of the vehicle’s price + VAT. The remainder of the balance, together with the interest, is repaid over an agreed period (12-60 months).

Finance Lease

Commercial Vehicle Finance Lease is a popular finance agreement for businesses needing finance for cars, vans and commercial vehicles. With Finance Lease the vehicle is hired to you by the finance company and remains the property of the finance company at all times. Monthly payments and interest rates are fixed for the duration of the contract. VAT is payable on the monthly rentals rather than in full at the outset of the contract.

Although a Commercial Vehicle finance lease will look and feel the same as a hire purchase, you will not end up owning the asset at the end of the contract. Ownership remains with the finance company at all times.

The agreement is structured so that you pay off the whole value of the asset. If you are still using the asset at the end of the original contract, a further contract can be arranged.

You will be able to offset rental charges against profits and you are able to claim back VAT as well. The agreements can be structured in different ways but you may find that you can choose when to sell the asset and, if so, get a rebate of the sale proceeds.

Contract Hire

Contract Hire (or Operating Lease) is a funding method suitable for those companies and individuals registered for VAT – up to 100% of VAT can be reclaimed provided there is no element of personal use. If the vehicle is used personally then this figure drops to 50%. The vehicle is hired for an agreed period of time, usually between 12 and 60 months and a rental is paid based on a pre agreed mileage.

Contract Hire can include full maintenance, including all wearable items such as tyres and brakes etc. At the end of the contract the commercial vehicle is simply returned to the finance company so alleviating any disposal hassles or depreciation risks. Also up to 100% of rentals can be offset against taxable profits.

Refinance

Not Looking for new vehicles, but want to refinance your existing fleet of vehicles? No problem, we can do this for you too. We will obtain the information on your fleet to provide a total valuation and from there we'll be able to provide funding at typically around 80% of their value. These funds will be paid into your bank account (after repaying any existing finance) and can be used for a variety of reasons :- debt consolidation, working capital, deposit raising or funding new contracts to name just a few.

A straightforward way of making the assets within your business work for you.

Invoice Finance

Invoice finance is when the lender uses an unpaid invoice as security for funding, giving you quick access to a percentage of that invoice’s value, sometimes within 24 hours.

The amount of money a provider will lend you is based on its own risk criteria. But this method of funding lets you access finance for cashflow or investment purposes, using an often-untapped asset on your balance sheet.

There are two main types of invoice finance:

Factoring

This allows businesses to generate money against unpaid invoices. The finance provider will lend you up to 90% of the value of your invoices. It will also manage your sales ledger and collect payment for your invoices direct from your customers. It will then deduct the costs of the factoring service, before paying you the remaining balance.

Invoice Discounting

This works in a similar way to factoring, but your business keeps control of customer payments. You pay a fee and a discount charge (interest) if you use the funding, much like a standard overdraft.

How invoice finance works

You provide the goods/services to your customer and invoice them
You send the invoice details to the invoice finance provider
A percentage of the face value of the invoice is paid to you, usually within 24/48 hours (different factoring companies will advance different percentages % depending on their own risk criteria)
Depending on the type of invoice finance, either you carry out payment chasing as normal or the invoice finance provider will take control of this part of your client relationship for you
When your debtor pays, the remainder of the invoice that you didn’t receive earlier is paid back to you – less a service fee.

Advantages of Invoice Finance

The obvious advantage of invoice finance is being paid the majority of an invoice within 48 hours, instead of waiting 30+ days, thus helping businesses manage their cash flow.

The Other significant advantage is that invoice finance gives businesses a way to fund their growth without taking on extra liabilities or debt, as with a business loan, and using assets they already have.

Things to Consider

It’s important to look into the different types of invoice finance that suits your business. For example, you may have to put your whole ledger through the invoice finance provider but may wish to only finance a few invoices or customers. Or you may need to use the whole ledger to access more money.

Some invoice finance providers will insist on managing credit control themselves which may impact on your customer relationships.

Commercial Loans

Commercial loans can be secured or unsecured loans. Secured loans are usually cheaper because the lender is taking a lower risk, but you need to have assets to use as security. Unsecured loans are useful for companies that don’t have enough assets to get a secured loan.

As with all loans, commercial loans have certain requirements a lender will need your business to meet. This is often in the form of assets offered as security and some examples offered for a secure commercial loan are:

Property
Vehicles
Shares or a stake in the business

The lender may also negotiate on the term of your loan if your business is looking to borrow a larger amount of money compared to the assets you can offer.

Other types of commercial finance

Commercial finance types are extremely varied. The first way to compare commercial finance products is by seeing whether or not they require security (or ‘collateral’).

Secured commercial finance is backed by property or assets, which could range from commercial property and business equipment to the personal home of the business owner.

Alternatively, unsecured commercial finance doesn’t require security, but because the risk is higher for the lender they will look closely at your credit rating and may require a personal guarantee.

The world of commercial loans and commercial finance is more varied than ever, and it's hard for businesses to know where to start. If you're looking for a commercial loan, we can help you find the right one to suit your business needs.

Property Finance

Commercial property finance has many variants, sometimes making it complex and difficult to understand. There are several platforms out there, each suiting different projects – the key is finding out which product best suits your business needs. Here’s the more common commercial property finance products available on the market.

Commercial Mortgages

Commercial Mortgages are available to a range of businesses, from sole traders to limited companies. Lenders will normally fund up to 75% of purchase costs with terms of up to 30 years. Typically they’ll secure the mortgage against a first charge and affordability is based on the profitability of your business, and its ability to make the monthly payments.

Property Development Finance

Property Development Finance is usually in the form of a short-term loan that’s used for the development of a new building project, or refurbishment of an existing property. Lenders will look to advance up to 70% of the gross development value, and terms can be up to 24 months.

Portfolio Finance

A long-term business loan that’s offered to property investors who have a number of rental properties. The lender offers the ability to consolidate borrowing into one loan. Serviceability of this loan is based on rental income.

Bridging Finance

Bridging Finance is a short-term finance solution often favoured by property developers and investors, which provides a quick way to finance the purchase of a property. The lender will take a charge on your property, and will seek repayment once the loan has come to term.