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How Can Funding Be Used To Grow An Engineering Business?

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Coins stacked up on top of eachother

The UK has a proud engineering heritage, from Brunel, to Barnes Wallace and today, James Dyson. Many of the projects, past and present, are world-leading both in their scope and ambition - you only have to look at the Channel Tunnel and Crossrail, where the tunnel boring machines have literally redefined what is possible in urban engineering.

Those big-ticket projects are vital in attracting new talent to the sector, but it’s at the SME level where a majority of the activity actually happens.

The Fourth Industrial Revolution is currently a big discussion point, with much having been said and written on the subject. The consensus seems to be that we are still at the start of the journey and subsequently, that it’s more evolution than revolution, with new technology and rapid advancements the order of the day.

This leaves many firms looking to get up to speed, prompting a flurry of questions surrounding the potential resources available to them. How do I ensure that I don’t get left behind? Where do I go for funding? How do I know which avenue best suits my business?

Close Brothers Asset Finance has been supporting the engineering industry at SME level for many years, through all the economic cycles - not only during periods of growth. We have a team of dedicated experts, most of whom have first-hand experience of the engineering sector and understand the pressures faced by the industry.  It’s difficult to overstate the value this brings - it’s great to have access to finance, but having a structured deal in place, suited to your individual needs, is much more advantageous. Amongst other factors, the latter gives you peace of mind that your assets are secure and won’t be repossessed by a funder who has limited awareness as to how the industry works.

Finance Options

Our message to our customers is that asset finance is far more flexible than a standard bank loan or overdraft. The repayments are spread over an agreed term and can be structured to correlate with the income generated by the asset itself.
Our financial products can help SMEs acquire almost any investment, whether it’s their first CNC machine tool (new or used), a CMM, an EDM machine, or maybe the very latest 5-axis machine tool technology, automation with ‘lights out’ capability, or a fibre laser cutting system.

Looking specifically at the engineering arena, we have found that refinancing works particularly well when businesses need a cash injection. It works by re-financing some - or all - of your current equipment to free up working capital, enabling you to purchase your next piece of technology.

Getting a little more detailed, Sale and HP Back is a form of refinancing that can be used against most types of equipment, making it suitable for companies of all sizes - including sole traders. This method means that we purchase the asset and finance it back to you. Repayments are calculated in line with the income stream generated by the asset and at the end of the refinance term, you own the asset outright. This option applies whether you already own the asset, or are using it under a finance deal with another provider.

The reason refinancing works particularly well in our sector is due to the low depreciation of engineering assets and the increasing longevity of machines. These factors allow us to refinance the kit and consequently, help businesses retain cash just when they need it to spend it. For example, a company may require funds to invest in their people, or to expand.

Our message is clear; we’re here to help. Our in-depth knowledge – as well as our extensive experience – allows us to deliver funding for the assets you need, finding affordable ways of spreading the cost of equipment and machinery.
From £5,000 to over £5 million, we provide funding solutions for a comprehensive range of engineering assets.

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asset finance is not the be all and end all.

what the asset finance people fail to advise any unfourtunate person using their facility, is that advances are tied to your clients credit limit, therefore you will not get all of the money as agreed, only upto the credit limit allowed, which includes vat. this can have serious implications on your cashflow as it is one item in the small print not talked about, and if your client has a decent credit limit why use asset finance anyway.

Asset finance is another good idea for the banks to rip people off.

Hi Graham,

Thanks for your comment. However, I don't know where you get your information from, but quite frankly it is not true of how Close Brothers Asset Finance operates. A client of ours will always get the full amount of finance as agreed, this being based upon the cost of the asset/assets.

For your information, asset finance has become the fastest growing finance option for businesses of all sizes, across all sectors.

For more information, please visit www.closeassetfinance.co.uk

Kind regards,

Karl

 

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