Lease Finance

With a hire purchase agreement, the borrower pays the VAT and a deposit upfront, though these can be financed. With lease finance there is no deposit, and the VAT is spread across each payment. With hire purchase the payments cannot be deducted from corporation tax but it may be possible to claim depreciation and Annual Investment Allowances. With lease finance, the entire monthly payment can usually be deducted company profits before corporation tax is calculated. With hire purchase, the borrower has a guaranteed right to buy the title of the asset they have financed, which will normally be for a nominal administration fee. At the end of a lease finance agreement, the borrower can give back, continue leasing or buy the asset.

Lease financing helps startup companies afford large, often expensive equipment by paying off the cost in smaller payments over a long period. This makes it much more accessible and convenient to get all the assets you need to get your business off the ground. It is also helpful if you only require access to the equipment temporarily.

This depends on the agreement you have with the equipment provider. If you wish to keep the equipment for your business after the lease period ends, then you can agree to do so and pay off the cost. Lease financing is most commonly used for equipment or machinery that is only required for short periods.

Terms are available between 2 and 6 years. Options available to you may be dependent on the circumstances of your business, but then the final choice is up to you.

On the contrary, asset finance is designed to spread costs over a period of time, whilst your new equipment generates revenue. Using your business’ cash or credit card and buying outright can mean that there’s no free cash for emergencies or to cover fluctuations in demand. Using finance helps even out the monthly budget and choosing a lease finance or hire purchase deal allows you to treat tax in different ways which may suit your business better. Finance allows you to get what you need now, rather than waiting to buy outright, this helps avoid inflation, as you buy at today’s prices and means you have use of the asset immediately to help grow your business.

Whilst banks can offer different rates, they often reject certain type of purchase, businesses in different industries and have very strict lending criteria. At Portman we deal with a panel of over 40 lenders as well funding businesses with our own money. We have access to specialist lenders and specialist types of finance, giving a variety of options and a greater chance of success. Portman may have rates that are not available to a customer who goes direct and can also explore the whole lending market in one go, saving you time. We have access to specialist lenders that are not available to individuals and can even put together finance packages from multiple lenders. All of which gives you competitive rates, with a greater chance of acceptance.

The interest rates available to each customer vary based on a large number of factors including the trading history and credit rating of the business, the credit history of any company directors, company turnover, how much money is required and what the funds are being used for. For customers with the best credit rating, Annual Flat Rates start from: Vehicle Finance – 5.5% Asset / Equipment Finance – 5.9% Growth Guarantee Scheme Asset Finance – 6.49% Unsecured Term Loan – 7.2% No PG Tax Loan – 9.4% Short-term Loan – 12.3% Short-term Flexi-Loan – 13.2%

Portman can guide you through the application process. After discussing your needs and collecting business documents we can save you time, completing proposals and applications on your behalf. In the first instance, the documents we would need are: copies of a recognised photo ID, 6 months of bank statements, a copy of your business plan and possibly a copy of your CV. For established businesses we would also ask for a copy of your management accounts, profit and loss and balance sheet.