The world of finance can be a tricky road to navigate. routeone speaks with a range of financial providers that know the industry inside out
Close Brothers Asset Finance has been funding coach and bus purchases for several decades, yet it believes many business owners have a limited understanding of what asset finance is and how it can help them.
“Asset Finance is an alternative form of funding used by businesses to obtain the equipment, vehicles, or capital they need to grow,” explains Heidi Banham, Marketing Manager (Banking Division). “It makes the otherwise unaffordable affordable, because it gives businesses access to the vehicles and equipment they need without incurring the cash flow disadvantage of an outright purchase.”
Typical finance products include hire purchase (HP), which allows the customer to buy the equipment on credit – the finance company purchases the asset on behalf of the customer and owns it until the final instalment is paid. Refinancing (capital release) is where a finance company purchases the asset from a business and finances it back, releasing the equity raised into that business’s cash flow. At the end of the refinance term, the operator owns the asset. Another option is finance lease, where the full value of the equipment is repaid to the finance company, plus interest, over the lease period, while in an operating lease a business can rent the asset from the financier while it is needed.
Driving business forward
Propel Finance has over 25 years of providing asset finance to UK businesses, and currently supports over 40,000 customers. It provides HP, finance lease and refinance agreements for new and used coaches, buses, minibuses and related equipment, such as vehicle lifts and brake testers.
Propel is keen to support the industry and understand challenges faced by operators. “Our intention is to build longstanding relationships with our customers, offering flexible and competitive finance terms,” says Relationship Director Chris Rich. As a dedicated coach and bus finance specialist, Chris has experience in helping operators obtain finance. “We have a market-leading proposition for operators and we are committed to providing every customer with exceptional and personal assistance to ensure speed of service.
“We emphasise relationships – taking the time to understand customers and their business goals and objectives, coupled with our in-house funding capabilities and access to a panel of specialist lenders. We then provide the best deal tailored to the customer. Examples of how we can tailor agreements include deferment of VAT, balloon payments to reduce monthly repayments or seasonal payment profiles to reflect the businesses’ income streams.”
During the pandemic, Propel has supported new and existing customers in the sector with asset finance facilities; some of which have already returned for new business and complimented the support. “We value the level of trust shown from our customers; and believe this is vital as we head out of the pandemic and return to some form of normality. It’s important for us to provide underwriters a balanced view due to the challenges operators have faced, thus enabling us to attract more supportive responses,” Chris adds.
We emphasise relationships
– taking the time to understand
customers and their business
goals and objectives
Asset Alliance Group (AAG) has been serving the industry with specialist financial consultation, direct funding and through its brokerage platform for over 18 years.
Today, AAG works with the UK’s largest coach and bus operators as well as privately owned regional operators throughout the UK. The company says it is the largest independent funder of buses into the Transport for London network and has been financing many low- and zero-emission buses currently operating across key cities. The business partners with all bus manufacturers in vehicle procurement to find the right solution and the lowest cost of ownership options for their clients.
AAG operates independently and now with the financial backing of a private banking group, and provides similar services for the commercial vehicle sector and general asset funding for all forms of capital purchases. Its consultation services come at no charge and aim to optimise cash flow, balance sheet and tax management in its customer’s vehicle strategy, taking the legwork out of finding the best finance options.
Mistral Group, a leading provider of coach and bus rental services and asset finance solutions with over 21 years’ service to the industry, works in partnership with Alexander Dennis to supply new coaches and buses for flexible rental terms up to seven years. It can also provide fleet vehicles for shorter term hires and has a range of exrental vehicles for sale.
Mistral Group Finance also provides a range of finance solutions. “We support the sale of our own ex-fleet vehicles with finance, as well as offering this service to operators for vehicles sourced from other manufacturers or dealers,” explains Sales Director Martyn Bellis. “Our finance solutions typically include HP, operating lease and finance lease. We can also offer re-finance solutions.”
Focusing on the future
With ongoing Euro VI and PSVAR legislation, Landmark Finance says it is time to look towards the recovery in the coach industry, illustrated by the decline in tourism work, with the green shoots of this work returning in the not-too-distant future.
Assisting sole traders, partnerships and companies through a range of vehicles from single to multi-fleet, it can also provide solutions related to most commercial assets a business may require, such as office equipment.
“Government schemes are still available including the Recovery Loan Scheme, extended to 30 June, as a great alternative to overdrafts and traditional bank loans, with the addition of no Directors’ guarantees under £250,000 of borrowing, and can be used on both term loans and asset finance,” says Sales Director Andrew Cartwright. “As a specialist in the coach industry for over three decades, we work with our extensive panel of funders to meet operators’ requirements.”
Mike Austin of finance broker Crystal Business Finance believes due diligence must be the core of future business. With coach and bus still marked as a ‘heavily impacted industry’, simply finding a funder will be the first hurdle.
Operators should therefore look to brokers specialised in the coach and bus industry. With a multitude of brokers working across all sectors of UK finance, there are some without the necessary understanding, which could open up risks. “You want a broker who has been in the industry for considerable time,” Mike adds. “Brokering is not just about placing deals – it’s how you handle that deal going forward. Good brokers take time to know an operator’s business. In return, operators should show they are in control of their business, and that relevant financial information is up to date.”