Finance for Distribution Services
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Funding for equipment
- HP from 6-60 months
- Leasing with no cash upfront
- We can usually beat ‘0%’ finance deals from equipment suppliers
Funding for your vehicles
- Secured loans from 2%
- Unsecured loans from 4.9%
- Contract Hire
- Raising funds with a commercial mortgage 2% above base rate
- Secured lending
- ‘Jigsaw’ funding
- Asset refinance - letting you use existing investments again
Talk to Rangewell – the business finance expertsDistribution is fiercely competitive. At Rangewell, we work across the entire lending market, and use our expertise to find the lenders who will offer the most competitive funding solutions for you business - giving you better chances of success.
Distributors are the vital link in the chain between small manufacturers and end users. They can act as a wholesaler, as sales organisation or as a shipping agent – but however they work, the one thing crucial to their success is having access to the necessary funds.
The costs don’t stop there. With rising fuel prices and high operational costs, it can be difficult to maintain a healthy cashflow. In addition to this EC legislation continues to put more pressure on the industry to comply with, for example, more stringent emission levels under Euro 6 legislation.
Staying in the haulage business means keeping every cost under control.
The costs you face
· Fuel costs including duty - accounting for about quarter of all operating costs
· Road and bridge tolls, and city congestion charges
· UK regulation and compliance costs
· Staff costs – the average salary is around £22k, and demand for qualified drivers is pushing wage costs upwards.
· Vehicle excise duty (VED) Vehicle-related costs
· HGV insurance costs
· HGVs purchase and leasing costs
· Slow payment of sales invoices
· Trailer hire
§ You also face almost entirely unregulated competition from Eastern Europe with lower fuel and labour costs.
At Rangewell we can help you find solutions to all your costs.
Your funding options
Finance solutions for the haulage industry include:
· Asset finance
· Invoice finance
· Secured and unsecured loans
· Tax loans
· Working capital finance
· Funding for growth
Asset Finance - providing the vehicles you need
Asset finance solutions let a lender finance your vehicle. You spread the costs and repay the lender while your vehicles are already working for your business. Asset Finance include a range of funding solutions, all designed to help you acquire the vehicles that keep you on the road to success.
Of course, it is simple enough to get finance when you buy a vehicle. But the fact is that dealer finance could be a costly option.
Truck and van dealers may offer a bewildering variety of finance plans. Some even offer 0% finance to help them close a deal, but they may hide the real costs. The deals they offer may be designed to maximise their profits, and often mean that the purchase price is inflated to pay for the finance.
You could be better off asking for their best price for cash, and getting finance from a specialist lender. Your overall costs and monthly payments could both be reduced.
Asset finance solutions include:
Hire purchase works exactly as it sounds. You ‘hire’ the vehicle until you’ve paid enough to ‘purchase’ it.
With HP, you can pay for the equipment you want for the long term with fixed monthly repayments over up to 5 years, letting you manage your cashflow better. Arrangements generally last between 12 and 72 months. You pay a deposit plus fixed monthly instalments for the agreed term, after which the assets become yours – which can allow you to continue to operate it, or to sell it on.
You’ll normally have fixed monthly repayments so you can manage cashflow during the term.
An alternative is the ‘balloon’ payment. This lets you make smaller monthly repayments during the term of the arrangement, with a final, much larger payment (the balloon) at the end. This can reduce monthly outgoings, and allow you to return the vehicle to avoid the balloon payment.
Leasing gives you flexibility. You can regularly upgrade your vehicles, and in some leasing arrangements, you have the option to own them at the end of the term, or simply return them and take out another arrangement on a new vehicle.
You can also decide whether you want maintenance and insurance to be included, and whether you need the truck for its whole working life or a shorter, agreed period.
Contract hire is another type of asset finance arrangement often used for vehicles. It lets you work with the latest vehicles, budget ahead in confidence and avoid the risks associated with vehicle ownership – like maintenance costs and depreciation.
You set up a contract with a finance company which will buy the vehicle you need, and let you hire it for a fixed period, with an agreed mileage. They will be responsible for maintenance, and will simply repossess the vehicle at the end of the contract, allowing you to acquire another new one with a new contract.
Payments are calculated on the purchase value less the estimated value of the vehicle at the end of the agreement. This helps keep your monthly repayments down, because the vehicle will be sold on by the finance company. You are in effect financing the vehicle only for the time when you are using it. This has the benefit of making it easy to switch to a new vehicle at the end of the agreement. It could be appropriate if a prestige vehicle is required.
Asset refinance - Making existing payments easier
If an existing finance arrangement is causing problems, or if you want to redirect cash elsewhere in your business, we may be able to help find a refinance option. A lender will pay off what you owe under your original agreement and set up a new finance arrangement.
This can mean reduced repayments, spread out over a longer term. It could also allow you to release a substantial cash lump sum if you wished to refinance a large fleet.
Find out more about asset finance and asset refinance solutions<link>
Invoice finance – helping your deal with cashflow issues
The haulage industry bears the brunt of difficulties anywhere in the economy. It can face real problems when customers take longer to pay and in some cases failing to pay at all.
Waiting 30days to get paid is bad enough. Some customers expect terms of 90 days from their hauliers. Having to keep operating for that time without money coming in can cause major cashflow issues. Wages, fuel and finance still need to be paid even if the revenues are not coming in.
Invoice finance funding for the haulage and transport industries can be a valuable way of freeing up cash sitting in unpaid invoices to help you cover those essential overheads.
With it you can release cash tied up in invoices rather than wait for 90 days for payment to come in. Rather than having to wait to be paid, it lets you take up to 90% of each due payment immediately. The remainder will be paid to you, minus fees, once the customer settles the outstanding balance.
It's an ongoing credit facility that protects you against late payment – because it ensures you get paid fast even when customers are slow.
Invoice Finance can help power your business growth. If you have to wait to get paid, a new customer can actually be a problem – because you don’t have the cash to for the extra vehicles staff and fuel. With Invoice Finance, you know the money will be in your bank almost as soon as you invoice. The more work you do, the more cash you will have to call on.
There are two types of invoice finance.
Many providers offer the option of Bad Debt Protection as part of their service, which means even if your customer goes bankrupt or for other reasons fails to pay, you don’t lose out.
Find out more about invoice finance<link>
Funding for premises
Your haulage business will need a secure depot, and may need a workshop and warehousing facilities as well.
Leasing suitable space may be the most versatile solution. Prices will vary across the country. Commercial property owners don’t like space being vacant, so you might be able to negotiate. You may need to borrow for the deposit on a long-term lease. An unsecured business loan <link> could help you raise the cash.
Alternatively, you might want to consider using a commercial mortgage to buy premises outright. Because they can spread the costs over 20 years or more, commercial mortgages may sometimes be arranged at monthly costs similar to a lease, and help you buy an appreciating asset for your business. You may need to provide a deposit of around 40%, and it is uneconomical to borrow less than £50,000, but there is no set upper limit.
Commercial property finance is arranged on an individual basis. Get our help finding the most competitive lender. <link>
Buying an existing haulage business
Buying an existing haulage business with a fleet and established contracts could offer immediate returns. Knowing the kinds of profit that can be generated will help convince potential lenders that your plans are viable. A secured loan could help you to borrow the large sums required for a buy in our buy out of an existing business. You might also consider ‘jigsaw’ funding. This is a bespoke finance package, made up of a number of loan types, such as a commercial mortgage for the premises, with other loans to cover goodwill, and asset finance for the equipment.
Contact us to find out more about funding for buy ins and buy outs <link>
Operating your business will also mean costs – for staff, fuel tax and other overheads, until you start to show a profit. There are a number of ways to provide for these costs.
Borrowing is a simple solution for finance challenges. Business loans may be secured or unsecured
Unsecured loans are like personal loans, but based on the creditworthiness of your business, and don’t involve holding any assets as security. Loans are repaid in monthly or quarterly instalments over an agreed term, usually under 5 years. Modern lenders can provide fast unsecured lending, but you might need to provide a personal guarantee. <link>
You usually can’t borrow more than one month’s turnover without security, and most unsecured loans providers will not lend more than £250,000. For a new business operation, many lenders might only be prepared to offer a secured loan.
Secured loans are ‘secured’ because the lender will require security in case you cannot pay the loan back. This could be your home, or your business premises or even your fleet.
You can have longer to repay, and enjoy lower interest rates. This means that monthly repayments can be lower and easier to fit in with your cashflow, and it may be possible to borrow larger sums of money if you can provide suitable security.
Our lending teams can discuss your needs, and help you find the kind of loan to fit your business needs. <link>
Tax is an issue for every business. A large quarterly VAT or annual tax demand can cause problems for your cashflow, particularly when it falls at the same time as other costs.
Funding is available to let you spread the cost of your tax demands into affordable monthly payments. This will help ensure that your business can avoid cashflow problems, and makes it easier for you to budget ahead in confidence.
· Benefits of a tax loan:
· Better control of cash flow
· Fixed monthly payments
· Quick and simple to arrange
· Avoids issues with HMRC and potential penalties
Find out about tax loans <link>
Working capital finance
The early days of any business are challenging. As its name suggests, working capital finance is designed to boost the capital available to your business when it is not generating sufficient capital itself. It's often used to provide cash to pay staff and operating cost while business is slow during the early stages or during a period of growth when your cashflow is already stretched. It is usually designed to be repaid in the short- to medium-term, once your haulage business is established and has a healthy monthly turnover.
Find out about working capital finance <link>
Funding for growth
Once your haulage business has started to establish itself, you may need to consider growth. Taking on more drivers and expanding your fleet to take on more contracts can help boost your profits.
Additional investment will be required. This can be challenging if your business does not have the long trading history and profit record that lenders usually require. However, there are lenders who take a more enlightened view and may be able to can help.
Our finance experts can help solve your growth capital needs <link>
How we help you capitalise your haulage business
At Rangewell we work across the entire lending industry, and we have finance experts with personal experience in the needs of the haulage sector.
Their expertise works for you. Our team knows the lenders who specialise in vehicle finance, and those who understand your business sector. It means that we can help you find the most competitive rates for all types of vehicle finance solutions – from both the established lenders, and the new Alternative funding providers.
We put this knowledge to work for you, finding the most competitive deals for the vehicles you operate, from a single van to a complete HGV fleet, and the most appropriate forms of finance for your other business needs.
REAL EXAMPLES OF WHAT WE CAN DO
Find the most competitive funding to allow a new operator to set up
Help an established haulier use asset funding to equip for a major new contract
Source a lease arrangement to build a road haulage arm for a wholesaler operation
Find the most competitive finance for a single van for a new business
Help an established operator to arrange a single lease to provide 49 new trucks for three regional depots
Helping you build your profits
No upfront capital expenditureThe cost of your trucks can be spread over months, or years, depending on your budget and business plans.
Getting on the road without a depositYou may not even need a deposit with some types of asset finance, and repayment can be spread
Low monthly paymentsLending can be secured on the assets themselves, so interest costs and your monthly repayments can be reduced.
Scaled for your business operationsWhatever the scale of your fleet there is a probably an asset finance solution to fit it. Agreements can cover individual vehicles worth thousands of pounds or fleets costing hundreds of thousands.
Fixed paymentsPayments are usually fixed, allowing simpler cash flow management.
Reducing riskIf your business hits problems and you can’t keep up the payments, the lender can recover their costs by taking the vehicle. No other assets are at risk.
Download Rangewell’s free and detailed guide to Finance for the Distribution Sector
What are the types of finance - which do you need?
Why not all providers are equal - finding the one that’s right for you
How we can help you pay less than 0%
The downsides to Asset Finance - and how to avoid them
How to arrange Asset Finance - what paperwork do you need?
Key terms explained
Leases may count as debtMost leased vehicles will affect your balance sheet but investors may view long-term lease as debt and adjust their valuation – other lenders may also reduce loan availability.
Could your fleet be at risk?If you are unable to keep up repayments on a hire purchase or lease agreement the lender could repossess your trucks.
Long-term commitmentA lease may be a long-term commitment, and it may be difficult to renegotiate if your business needs change.
Our service is...
ImpartialTransparent and independent, treating all lenders equally, finding the best deals.
In-depthEvery type of finance for every type of business from the entire market - over 300 lenders.
In-personSpecialist Finance Experts support you every step of the way.
FreeWe make no charge of any kind when we help you find the loan you need.