£92,000 to equip a laundry start-upPublished on 28th December 2019 2019-12-28T12:00:00+00:00 - Last update on 8th February 2020 2020-02-08T16:59:05+00:00
The basics of the laundry process - the big machine which provides hot water cleaning of 100kg or more of fabrics - may not have changed in generations. But the machines themselves have moved on. The latest generation of laundry equipment can not only provide efficient cleaning, and have eco credentials that were unheard of a few years ago - they can offer increased throughput and reduced operating costs with faster process.
But they can command a high price to buy and install.
Spreading the cost
Asset Funding solutions can often provide the most cost-effective solutions to help you provide the equipment you need and includes solutions to let you buy outright or lease items of all kinds.
We were recently approached by an experienced laundry operator in South London who had seen an opportunity to start up his own business, working mainly with clients in the hotels and catering trades.
“I knew the business, and I knew that there were plenty of potential customers in the area. Restaurants can’t open without spotless table linen, and restaurants and salons need a constant supply of clean towels.”
He had found the ideal premises, which had been used as a laundry in the past. But although it had the services required and the perfect location, it needed machines.
“I could have brought in secondhand gear - but there is always a worry about reliability and the operating costs can be higher than new kit. I needed efficiency, so a line of the latest model washers - plus a full set-up of ancillaries was the way to go. “
He found a dealer who was eager to provide and install the machines he needed - but the total cost of the new equipment came to £92,000.
He wanted to spread the cost and looked at Hire Purchase - but his concern was that the finance plan offered by the dealer - with an interest rate of 15% - was too expensive. He was determined to find a better deal.
He turned to our finance team at Rangewell for help getting an Asset Finance solution that would mean lower monthly repayments.
Asset Finance and your business
Asset Funding can be the most cost-effective way to fund for equipment of all types.
This is because it differs from a straightforward loan in one key respect. The security for the loan is provided by the equipment - or asset - that you are acquiring. Security in this case means if your business is unable to repay the funding, the lender will repossess the equipment and sell it to cover their costs. As a result, the risk to the lender is much reduced - which means that the rate offered to you as a borrower can be reduced.
Hire Purchase is the simplest form of Asset Finance and normally requires an initial deposit followed by fixed monthly repayments. It lets you effectively ‘hire’ equipment until you’ve paid enough to purchase it at which point it becomes yours - making Hire Purchase ideal for durable items that you will want to keep and use for the long-term.
Leasing is an alternative form of Asset Finance, and lets you hire equipment without buying it - although, with some leasing arrangements, you may have the option to own the asset at the end of the term, upgrade it, or give it back. Asset Finance can also be set up to provide funding for used machinery.
There are many lenders providing Asset Finance, but rates can very substantially. Rangewell’s expertise can help secure the most competitive rates - frequently undercutting those offered by equipment dealers.
The challenge and the solution
Asset Finance is a routine type of business finance solution and can be arranged fast - especially for borrowers with an established business. However, although our client had run a laundry business for years, his new venture was the first business that he had owned himself.
As a start-up, lenders were reluctant to help.
He approached us at Rangewell to provide a solution.
Rangewell found a specialist Asset Finance provider which could provide the £92,000 funding at a preferential rate of 6% above base rate over 5 years. The looked at the value of the machine and the profitability of the business rather than at the client's status - which may be unavoidable with less specialised lenders
The funding Rangewell arranged:
£92,000 over 5 years at 6.75%
The process was simple and - because we were able to approach lending specialists at who understood the laundry service industry sector - it was arranged in the minimum time.
At Rangewell, we can help businesses of all kinds find better answers to all their funding needs. Our expert teams find the most appropriate funding solutions while our network of lender contacts and our unique online tool let us find the most cost-effective rates.
Our service is independent, fast and absolutely free. So if you want specialised expertise for your laundry business, see what options are available to you or apply for funding today.
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