Raising finance on an asset

[colin_mckellar]

Last May I had a verbal agreement with a high Street for a loan to finance for some new equipment worth almost £6,000. I was told that the rate would be 5.1% and to submit the paperwork. I did this and the day before the money was due to be transferred I got an email saying that the rate was actually 15.9%.
I cancelled the loan and raided my pension pot for the money and paid cash for the equipment.

I now want to try and get my money back out of the business (sole trader) and have had no luck so far with trying to get a lease on the equipment as it is now over 6 months old.

Any advice would be gratefully received.

 

[john1989]

By get your money back out of the business, do you mean raise secured finance against the assets?

 

[colin_mckellar]

I had tried to get a business lease for the equipment so that I could take my cash back out. I am not an accountant and I believe what I have done is give my business a loan. I am wanting the loan repaid and the asset to be secured by a lease or other financial product.

 

[Mark T Jones]

It will be challenging

In a nutshell, if you refinance within 90 days of invoice the goods are treated as new and you can refinance at the purchase price

Beyond that, it becomes a sale and leaseback, and any financing would be based on forced- sale value . On soft assets this is effectively zero, on solid, durable kit there will be a big initial depreciation hit

A more viable option might be a start up loan

 

[colin_mckellar]

My problem with loans is a lack of accounts. My first year look grim as there were a lot of start up costs and my 2nd year are due in April.
I was told that a personal loan could be taken out with a bank like Tesco and get the money paid into my personal bank account while making payments from my business account.

 

[Scalloway]

As you are a so;e trader I don't see a problem with your business making the loan payment. You may not be able to claim the interest on your tax return though.

 

[GGGSurrey]

Think carefully about in effect borrowing money so that you can repay what you describe as your pension pot. It's good to make pension plans but it's often a bad idea to borrow money just to then put it in a savings account.

 

[Mark T Jones]

My problem with loans is a lack of accounts. My first year look grim as there were a lot of start up costs and my 2nd year are due in April.
I was told that a personal loan could be taken out with a bank like Tesco and get the money paid into my personal bank account while making payments from my business account.

To take a personal loan you would need to be telling some porkies (in the industry we call that fraud). Unless you are running the business along-side a job you would also need to show an income, which it appears your business hasn't provided?

A start-up loan can be available until you have been trading for 24 months (evidenced by bank statements) - it revolves around the potential of the business and your ability to run it, rather than historic accounting information.

 

[colin_mckellar]

seems that some of the advice on here is better than I am getting on the High Street! I have no intention of committing fraud and I haven't applied for a loan.

I will contact Business Gateway in my local area and see if they know anyone local who can refinance the asset.

 

[Mark T Jones]

seems that some of the advice on here is better than I am getting on the High Street! I have no intention of committing fraud and I haven't applied for a loan.

I will contact Business Gateway in my local area and see if they know anyone local who can refinance the asset.

By all means try - I've been refinancing assets for 30 years & Suggest the best you will get is 80% of forced sale value (At a rate higher than your bank offered)