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Spring Budget 2017 – What it means for small businesses and the self-employed

We’ve all heard about the release of Philip Hammond’s Spring Budget for this year, and many of us will have tuned in to listen to the news summary about it, but how many of us understood what the contents of the budget actually mean for small business owners and the self-employed?

We’ve broken the budget down and highlighted the areas that will affect you and your business the most.

Business Rates
The high business rates were highly criticised and so the government has taken the following steps in an attempt to take some of the pressure off from the rates of smaller businesses.

  1. A fund of £300 million will be offered as a discretionary relief to small businesses that are the worst affected by the rates.
  2. Any business that is losing their small business rate relief will see their bill increase by no more than £50 a month.
  3. All pubs with a rateable value of less than £100,000 will get a £1,000 discount on the rates they pay.

Savings

From April 2018 the total tax paid by an employed worker and by one that has set up their own company is set to change. The chancellor plans to do this by reducing the tax-free dividend allowance for directors/shareholders. It will be reduced from £5,000 to £2,000. 

Tax
The chancellor has taken measures to benefit those in employment by scrapping the NIC Class 2 and raising the Class 4 national insurance contributions from 9% to 10% by April 2018. They are then due to rise to 11% in April 2019, which will raise £145 million a year by 2021-22. A self-employed person with profits over £16,250 will have to pay more as a result of these changes.

Economy

The UK economy is forecast to grow by 2% and at a faster and higher rate than was previously predicted. Although, this isn’t set to last, with Hammond outlining that growth will then fall to 1.8 in 2018 and 1.7 in 2019. Inflation is forecasted to be 2.4% and then 2% up to 2019.

We asked PFC Director, Alun Rogers, to shed some light on how this new budget will affect SME’s and freelancers –

“There’s no doubt that Philip Hammond has opted for some controversial changes in this 2017 budget, particularly in relation to national insurance contributions and business tax. There is also no doubt that it is already tough out there for SME’s and freelancers, and these rises in contributions certainly won’t help anything. That’s why we do everything we can to assist small businesses and the self-employed to source a range of suitable finance options when they struggle with unpaid invoices and cashflow issues amongst other financial issues relating to business.”

If you want to discuss what finance options we have available and how we may be able to help you and your business, then please do not hesitate to contact us here at PFC.

THE ROUTE TO FINANCE

For start-up businesses and SME’s, it can be tricky to convince lenders to grant you funding especially if your business hasn’t taken off the ground just yet or if you’re fairly new to the business and are already looking to expand. Often, if the principal bank does agree to finance the business, they will look to bolt-on far reaching security comprising debentures and will sometimes only agree to the finance if they can dilute their own funding with any of the available grants that exist for small to medium sized companies. This is very time consuming and laborious and certainly doesn’t help the client if they need fast access to decisions and finance.

We’re here to provide you with access to finance where others may say no. Together we can decipher what your best financing option would be, so that we can then put it forward to our panel of more than 45 lenders to find the best solution for the individual or business.

With our many available routes to finance you may never need to go to your bank again to ask for specific funding. PFC very rarely fails in successfully sourcing finance for our clients.

We listen to every business and we look at the size of your company, the owners and how much you have estimated that you want/need to borrow, so that we can work out ideal repayment terms and identify types of credit available.

In 2017 we have arranged an eclectic mix of funding already, for small sole traders up to multi-million turnover incorporated businesses.

Five and six figure VAT and tax loans (incredibly useful for ring-fencing essential cash within the business), single invoice finance (a few of our clients have provided current outstanding invoices which we have been able to get funding against to inject working capital into the company but without the need for entering into long term invoice financing), personal loans (many small business owners find this an ideal and competitively priced method of introducing capital into the business), asset finance (commercial vehicles, scaffolding and IT are some of the equipment we have arranged asset finance for so far this year), invoice finance and inventory funding (large major restructuring for a plant hire company, we were able to instruct a top-tier panel funder to roll out a new invoice finance package supported by a funding line for their stock) and many working capital loans.

In most instances, with a couple of items of supporting information (management accounts, last full filed accounts, and perhaps a few months business bank statements) we can propose to our chosen lender and obtain the approval within a few hours – this means from proposal to funds being paid out can be completed in as little 48 hours, and occasionally in the same day, depending on the type of finance applied for.

If this all sounds too daunting, don’t worry. You can always call us to walk you through the process and assist wherever possible along the way. If you’re thinking of borrowing to improve your business be it a small refit or a full-scale expansion, don’t hesitate to give us a call on 01829 738 799 or send us an email: enquiries@pfcfinance.co.uk.

PLANNING FOR THE UNEXPECTED

As we look back on 2016 it’s fair to say that it has been a year of plenty of unexpected outcomes.  Who would have thought this time last year that David Cameron would have resigned, Britain would be heading out of Europe and that Donald Trump will be the President of the United States in just a few weeks time?

The reality however is that throughout our lives we are often faced with the unexpected and it is those who are able to best adapt to the new situations that survive and even prosper.  This is also very much the case in business.

There are countless businesses out there that face change on a daily basis whether it’s due to external factors such as SMEs who face changes in government funding, through to businesses that lose an important customer in unforeseeable circumstances or even those affected by an unexpected 10% change in dollar exchange rates since June.

It’s at these moments that often cashflow or business plans take a hit.  Unfortunately, the days of a call to a friendly bank manager are over as the processes becomes more faceless and banks tighten their lending criteria.

The good news however is that access to finance is more available than ever through organisations such as PFC who can access finance for client businesses from a panel of more than 30 specialist business lenders.

Unlike banks, decisions can also be taken quickly offering clients agreement on finance typically in less than 24 hours and with cash deposited in the bank often within 48.  Being regulated by the FCA, we are able to work with a range of commercial organisations of all different sizes and business sectors to offer unparalleled access to finance whether unsecured business loans, asset based lending, invoice finance, bullet loans, commercial mortgages or personal loans.

Having a range of loans available and a team dedicated to finding the right access to finance to meet a client’s needs means that whatever the year ahead may have in store, there is quick, flexible and easy access to finance available.  As you relax this Christmas and look ahead to the New Year you can at least relax in the knowledge that whatever the future has planned for you, your finances can be taken care of.

 

BREXIT – IT’S BUSINESS AS USUAL

It’s now a couple of months since Britain took the brave step to exit the EU.  Since that time we’ve seen a new Prime Minister and Cabinet appointed, a volatile stock market and turbulent exchange rates as well as interest rates reach record lows.

Although only few may have predicted this situation at the start of the year, the reality is that the world continues to turn and that this economic environment is the new ‘norm’.  The good news however is that British businesses have been fast to react and return to business as usual.

According to the first estimate of the Office for National Statistics, GDP growth strengthened to 0.6 per cent in the second quarter of 2016, although much of that increase in activity was concentrated in the earlier part of the quarter, with a falling away seen in May and June as uncertainty crept in.

Although figures released this month show that the UK economy contracted by 0.2 per cent in the month following Brexit, the latest forecast from the National Institute of Economic and Social Research (NIESR) is that it’s increasingly unlikely that Britain will tip into recession.

Last week the Bank of England also forecast that the economy would narrowly avoid a recession, largely because of its decision to cut interest rates to a new historic low of 0.25 per cent and restart its Quantitative Easing monetary stimulus programme.

With the various initiatives in place to stabilise the economy and confirmation from Teresa May that Britain will leave the EU, we are however seeing more certainty and with it confidence return to the marketplace.

As a company that’s built a reputation for lending to a range of businesses from private practices to larger corporates, SMEs and individuals, we believe we are a good barometer of what’s happening in the UK.

Since Brexit we have seen the volume of requests for finance and actual lending increase by more than 20%, when compared to this time last year.  This is clearly a sign of confidence in the marketplace.

In addition to this, the number of funders willing to lend has also increased and we are pleased to announce that our panel of lenders has increased by nearly 10% allowing us to open even greater access to finance than ever before.

Having a wide range of funders willing to lend means that we are able to offer the most appropriate access to finance for the company’s requirements.  In the last few weeks we have provided an eclectic range of funding from six figure personal loans to invoice finance, VAT and tax funding to asset finance.

These are new and exciting times for the UK’s economy, with an unprecedented opportunity to take advantage of the low interest rates and more financial institutions with an appetite to lend, the outlook for SMEs that provide the backbone of British economy is extremely positive.

IS CASH KING OR IS IT CASH FLOW?

The availability of cash when it is most needed is one of the most important components of continuing success and growth for any business. There are many times in the year when cash flow may be tight, but some of the toughest times can be when having to find that little bit extra to pay personal, partnership or corporation tax bills.

Without cash companies can’t invest in new products, can’t implement future growth strategies or most importantly pay tax bills when they are due.

It’s not simply a case of having cash backing up your business. This money also needs to be readily available at the moment you want to push growth forward or when monies become due. So it’s all very well having the value of your SME tied up in the property you own, but if you can’t maintain a good cash flow with it, that value can be worth next to nothing.

The Importance of Cash Flow

For any business, cash flow is the lifeblood that keeps things moving. It derives from a variety of sources – payment for services from customers, money coming in from new investors and even interest from savings that can be ploughed back into the business. Having this money available with a relatively high positive cash flow (meaning more money is coming into your business than going out) means that SMEs can invest in the future, hire new staff, buy equipment and open additional premises if they want.

There are, of course, a variety of ways in which cash flow can be interrupted. Money might be tied up in a property and can’t be fully realised when you need it. You may be waiting on third parties to pay invoices and feed back cash into your business, even in some cases to pay wages. There might be a temporary problem or urgent situation that suddenly arises and diverts valuable cash, leaving less in the operating pot than you would like.

Finding the right financing with PFC

Whether you have a new project, innovation or are looking to pay your July tax bill often there is a need for some interim solution to help get over a particular hurdle. Whatever the reason, PFC can find the right financing for each particular situation your business faces. That includes:

  • Tax funding – Unlike other bills, there is limited leeway for late payments. Once the deadline passes, surcharges and penalties start accruing and can have a massive impact.  Having immediate access to funds can help manage any issues with short term cash flow.
  • Asset Finance: One area where businesses often need to push forward is with new equipment – it can improve their profitability but requires an initial, significant outlay which can be problematic. Rather than having to defer, PFC can help businesses find the appropriate financing for their improvements with structured repayments.
  • Commercial Loans: Finding a bank to make a large commercial loan can often be difficult no matter how it might benefit your business and help it to grow. We can provide a range of financing from bullet loans, buy to let financing and bridging loans that are tailored to individual businesses.
  • Invoice Finance: One area that all too often stalls cash flow for businesses is the delay in payment for invoices. PFC can help SMEs get over this hurdle by providing quick invoice financing that makes funds immediately available.
  • Practice Finance: Businesses from health and medical practices to the legal and accountancy professions often need tailored loans and financing schemes in place. Provision can vary from helping with practice development to spreading the cost of VAT returns.

Regular, strong cash flow is one of the primary factors that determines success and growth. Whether that’s getting over a temporary problem such as tax bills or invoice payments, PFC brings a huge level of expertise to the table and can help you find the financing that makes a difference.

Creative ways to double your money

Some great news for the creative industry is that Creative England has announced that it is supporting digital creative companies by helping to finance business growth through the provision of interest-free business loans.

The interest free business loans are designed to help fuel the growth of the fastest growing sector in the UK economy. The loans, provided by the Regional Growth Funds, will be targeted towards financing business expansion and new products which will lead to the creation of new, high-quality jobs.

The only small catch is that the loan must be matched 50:50 with other finance, sourced by the company. This is where The Practice Finance Company (PFC) can help by providing businesses with quick and flexible access to finance through our panel of 30 lenders who have been specially selected to meet the needs of our clients.

The interest free loan from Creative England is available to digital SMEs based in England, but outside of Greater London. Each company will be able to apply for an interest free loan of between £50,000 to £200,000 that is then repaid over a maximum of 3 years. The repayment period depends on you, your business and your project.

The money from Creative England is targeted towards the fast growing digital industries. These can include companies working in digital media and web (e.g. creative software development, digital media, web design, digital content), games (e.g. gaming and app development), e-commerce and software solutions.

Unfortunately, the loan fund is not for brand new start-ups but for companies who have already achieved a turnover of at least £200,000. The loans are principally targeted at companies looking to scale-up via through existing or new technologies or develop new products and services that will meet emerging client demand. Other opportunities that help facilitate business growth are also considered.

With quick and easy access to finance provided by PFC to help get the ball rolling, there is a real opportunity for creative businesses to access the interest free loan required to achieve their business growth ambitions. To take the first step, speak to the PFC team by clicking here or to apply for the business free loan, click here.

Does your Company need Corporation Tax Funding?

Unlike other taxes where there can often be some leeway for late payments if a company gets into difficulty, when it comes to corporation tax, once the deadline passes, those surcharges and penalties start accruing and can have a massive impact. This can put many companies under pressure in the run up to the tax payment deadline and force them into difficult decisions when it comes to business development and ongoing operational performance.

While there are many ways for companies to reduce their overall corporation tax bill, there’s always something to pay at the end of the day. Finding a solution that spreads the cost over the rest of year can help relieve unwanted financial pressure, release valuable capital for further investment, and give your business the breathing space it needs to get over potentially difficult periods.

At PFC we provide tailored tax funding for businesses that allows them to meet their corporation tax liabilities whilst spreading repayments more equitably over a period of months. This reduces the impact of a potentially large one off payment to the Treasury and can have numerous benefits including:

  • Makes sure businesses avoid being late with corporation tax payments because funds, for whatever reason, are not available or tied up at that particular time.
  • It releases valuable capital that can be used for developing new avenues and making sure existing business strategies remain on track.
  • It can relieve short term cash flow problems by essentially extending your tax payment deadline and making sure your business has more money in the pot.
  • PFC offers a flexible way to cope with any tax funding issues. Our tax funding facility allows for tailored loans between £1,000 and £2.5 million paid back over a period of 6 to 12 months.
  • The change to a fixed monthly cost for your corporation tax bill means that you can better budget over the year. You can choose to do it as a one off solution for current problems or incorporate into your ongoing business strategy.
  • Access to fast track decisions at PFC means you don’t have to wait long for a decision and solutions can be agreed in around 48 hours.

How PFC works

We are a brokerage group with a vast amount of experience in the field of private loans for companies, helping them manage areas such as tax funding, subscription payments and insurance premiums among our other funding provisions. We do this by having a close working relationship with our private financers, providing competitive funding for businesses that need it.

Sourcing commercial funding that works for the business that is accessing it is a fine art and obtaining the right terms is something that takes a great deal of experience and industry know how. At PFC our focus is in finding the right solution that suits your business and not a one-size-fits-all proposition that fails to tick all your boxes. To find out more, contact our experienced and friendly team today.

Spread the Impact of your Partnership Tax Bill with Tailored Tax Funding

Partnership tax generally costs more as a whole than corporation tax and working out each member’s liability can be difficult at the best of times. This can affect businesses such as architects, lawyers and accountants who share a common cause but often operate as self-employed entities within the partnership.

Making sure everyone in the partnership is well equipped for dealing with the tax payments due in January can ensure your business runs more smoothly and everyone stays on track and can meet their commitments. Swapping a one of payment to the HMRC for tax funding, where you basically get a loan for the amount you are liable for and pay it over monthly instalments can relieve a huge amount of pressure on practices.

At PFC we offer tailored, private tax funding that helps businesses working through partnerships to spread their liability over a short term period of 6 to 12 months. Most businesses falter when faced with unexpected financial settlements such as tax bills and having a way to ameliorate that impact can make a huge difference to the day to day operation of all partners.

The Benefits of Tax Funding for Partnerships

  • It spreads the cost of tax payments across a longer period, making sure that partners don’t have to find valuable funds as the deadline for HMRC returns approaches.
  • It allows partners to know where their tax liability lies and how much they need to pay each month rather than trying to get the payment together at the last minute.
  • Some partners are better at dealing with cash flows and tax liabilities than others and introducing tax funding can make sure additional pressure isn’t put on their capabilities because of the failures of another member of the team.
  • It gives breathing space for the partnership that allows it to grow and develop especially at a time of year when business is naturally slower.
  • The loan can be made by an individual who is self-assessing, to make sure liabilities are covered, or by the partnership as a whole to ameliorate any unforeseen charges.

How it Works for Partnerships

At PFC we’ve got a fair deal of experience in dealing with all aspects of tax funding for corporations, self-assessors and partnerships. With access to private funding that can be tailored to individual needs, we can work with you to find the right solution that suits your business. Payments can be made either directly to the HMRC or to the partner or partnership concerned and repayments can be spread over 6 to 12 months.

Tax funding is available for small and large partnerships whether the bill is just a few thousand pounds or much larger. If you want a solution that makes it easier to pay your all-important tax bill, then contact our highly skilled and professional team today.

Sweating your assets

Leveraging the potential of everyday business assets is just one way that cash strapped practices can generate the extra finances needed to grow or forge new paths within their industry. Find the right solution, and the right management company to handle it all for you, and a number of avenues can quickly open up that enable your business to function more flexibly.

Getting the Most out of Your Business Assets

According to the BBA, after a fairly stagnant period, it’s claimed that banks are beginning to loan more out to small and medium size businesses with over 30,000 loans agreed in the second quarter of 2015. For many businesses however, this may not be enough or there may be too many hurdles to overcome to access the finance. To such an extent, last year actual bank lending actually fell by some £400m.

As such, there are still many practices that go to their bank and get turned down for valuable financing, even when it is a relatively small amount. When that happens it can be difficult finding alternative sources of funding and a business can start to stagnate without the necessary cash flow. One avenue that’s proving increasingly popular is using your practice’s assets to secure a loan. You may be surprised how much you are actually worth.

Assets can come in all shapes and sizes, not just stock and infrastructure. For instance, your brand and logo is an asset and has a financial value as well as product and service developments and even written content. Your productivity and future potential is an asset too, though less tangible.

What your practice is worth today if it was sold is important. Whilst many very young practices may well have a negativity equity, others could have several thousands in previously unconsidered assets that can be packaged together and used to help get a loan.

How Asset Financing Can Benefit Your Business

Many practices require extra funding to meet short term and long term financial requirements, including partner buyouts and acquisitions as well as refurbishments and cash flow concerns. When the bank won’t agree to a loan it can get extremely difficult. The first thing practices need to do is identify the assets they have and then find how to leverage these.

At the Practice Finance Company our experienced advisors can help businesses find the right route to finance and secure a loan that not only matches and maximises your assets but also enables you to handle repayments. We’ve arranged over £3 million in funding for practices across the UK this year alone, helped by our access to private funding avenues. With the right financial team to support your business you can make your assets work harder and find you the right access to finance.

When The Computer Says No…

Whilst we may officially be out of the recession and business is definitely on the up, many practice partners and SME owners are still finding it difficult to obtain the financing from time honoured, mainstream sources that they need for development or day to day business operations.

Let’s face it, banks are still reluctant to lend to small businesses – the level of lending fell last year by almost £400 million and though things have picked up in 2015 there are still plenty of businesses who cannot access extra funds when they most need it. According to recent feedback, access to credit continues to be one of the major hurdles that small businesses face, on a par with the rising costs of utility bills and problems associated with getting payment from clients.

In short, there are plenty of instances when companies need a loan and the banking computer just says no.

So what does a small business or private practices do when it needs to grow or access finance and can’t get the bank to agree a loan? The good news is that there are alternative solutions available and many SMEs are starting to explore these avenues, building long term relationships with private financing companies that are more than simple monetary arrangements.

PFC works in a totally different way to your local bank. It’s not just about filling in a form and meeting set criteria that are largely skewed against lending in the first place. We are here to build a long term business relationship and not just tick off boxes for a loan formula in the vain hope that you might be eligible.

Our aim is to find the loan package that suits your business and give you access to fast, reliable finance that helps you to stay competitive. We do this by having on board more than 30 funders who are willing to lend to a variety of SMEs, from new start enterprises, to long-established companies.

Whether investing in new equipment, or simply a desire to introduce capital into the business for intangible purposes, our standard working capital lines of credit are ideal for general business investment needs.

Our combined 30 years’ experience is honed across multiple industry sectors, encompassing nearly every type of UK SME business.

With dedicated account handlers who get to know what your business really needs and fast response times, the PFC team has over 30 years experience of providing finance that simply helps businesses like yours grow. It’s not about targets and algorithms, it’s about building relationships that matter which is why we are able to provide the right access to finance for over 90% of our clients.

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