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Tracy Spence
Tracy Spence
Tracy Spence's Blog

How Brexit may impact on Short Term Business Loans

With the official Brexit date of 29th March fast approaching the government is running out of time to deliver a Brexit deal that everyone can be happy about. The possibility of a no-deal Brexit is looking increasingly likely, but if you listen to opinions being circulated in official circles, so is the possibility of delaying the UK departure from the EU for a future date.

Whatever your personal opinion about Brexit, we can all agree the whole thing is a complete mess at the moment with no positive solution on the horizon.

As far as UK businesses were concerned, many provisioned for uncertainty and stockpiled goods and supplies to tide them over for the short-term. However, many business owners have not planned for the current internal political turmoil that we are currently witnessing.

The government has found Brexit too difficult to deal with and we still don't know for sure whether we will have a soft or hard Brexit, or even something in between. So far the outcome for the UK is uncertain and will remain so until we get a clear Brexit agreement or crash out of the EU with no deal.

But what about the short-term lending market?

With the uncertainty that hangs over the country regarding Brexit at the moment, many businesses owners are feeling very cautious about taking up large loans or entering into long-term financing that could be negatively impacted by Brexit in whatever form.

Short-term lending for asset funding, stocking loans and manufacturing equipment leasing is being looked at as a much better placed option because it is seen as a way of funding their business that will best withstand any negative effects coming from Brexit.

There is good reason for this thinking because asset funding and the whole short-term lending industry is something that is quite insular and UK based. Stocking loans and other asset funding methods are mostly sourced from and supplied by UK based lenders. This means that there will be no cross-border negotiating and no disruption to transacting loans in the short-term.

Short-term lending has risen since the referendum

There is no doubt that the referendum in 2016 has impacted on the UK and this can be seen in the weakened property market. However, short-term lending has actually grown since the referendum vote. According to figures from the Association of Short Term Lenders (ASTL) annual bridging completions had risen to £3.98bn in the year ending 30th September 2018, that was a 21.2% increase compared with the same period the previous year.

With the uncertainty surrounding Brexit proceedings at the moment, most banks and financial institutions are proceeding with great caution, especially since the fallout from the last banking crisis still fresh in the mind. Procedures that have been put in place by the banks to help avoid another 2008 crash have seen large sum lending only being granted to those with an impeccable and proven financial record.

The tightening up of big bank lending criteria has created a flexible marketplace for other specialist finance providers, such as short-term lenders and asset funders.

No matter what happens now on the run up to the 29th March, we are in for a turbulent time. Negotiations and business transactions outside the UK may well become much more complicated and frustrating. This is expected to impact on the economy, employment and the import-export market. However, the one section of the financial services sector that is better placed to weather the Brexit storm may just be the short-term financing sector that has a strong history of being able to react quickly to change.

Vehicle Stocking Loans

The main obstacle faced by fleet van suppliers and car dealerships is being able to source large amounts of cash or financing to fund the vehicle stock they need to run a profitable dealership. It is impossible for a car dealership to sell from an empty forecourt. If you don't have the right make and model of car in stock for your customer to look at and test drive, then you are likely to lose that sale.

As most vehicle dealerships know, the more vehicles you keep in stock, the more likely you are to make a sale. This means you will have the cash-flow to achieve a steady stock turnover and deliver you a good stock turn ratio.

Keeping the cash flowing

While holding a lot of vehicle stock your money is tied up until you make some sales. This can slow down your cash flow so being able to source a short-term stocking loan can be essential for your bottom line. Sometimes a short-term loan such as this can even make the difference between your business remaining buoyant or going under.

Asset Funder are here to help you with your stocking loan needs to keep your business cash flow moving and to help your business remain competitive. We can organise a fast and very cost-effective stocking loan that will allow you to restock at the right price when you need it. You can ease your tax burden too as your costs can be offset.

Our friendly team at Asset Funder are here to work closely with you and offer you our in-depth industry knowledge and experience to help you secure the very best loan option that best suits your business needs. Contact us today to find out how we can help boost your business success!




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