Why Use Lease UK and not your Bank?
Often clients new to financing equipment purchases for their practice will turn in the first instance to their bankers. They may well have borrowed from them initially to buy their practice or to acquire the freehold of the practice premises.
Their perception can be that borrowing from the bank for a new chair, for instance, will be a simple top up to their current loan which will keep the rate the same and take minutes to approve.
Unfortunately, in today’s climate of risk management and more complex lending criteria adopted by most banks, any additional lending to a business is rarely the work of a few minutes. Banks are taking weeks to make lending decisions and require a large amount information from clients before they will even start the underwriting process.
Most banks are not offering fixed rate financing to business for practice improvements. They will offer a rate over base and that base rate is steadily increasing as the inflation rate continues to increase. This means that your bank loan repayments will increase so making budgeting much more difficult.
They may also have a minimum amount they will consider for a new lend which may be far more than you need for that intra oral scanner or replacement suction system.
The other complicating factor currently is CBILS or Bounce Back loans, which many practice owners took out during the pandemic. Many banks are viewing these loans as distress financing and are requiring these to be repaid, either as part of any new lend or more worryingly in some instances before any new lend is considered. Repaying these via a refinance will take these loans outside of the CBILS or Bounce Back loan criteria so they will no longer be government backed and the rates will be at the bank’s current lending interest rate.
So any move to use your bank for buying that new chair, updating the pump system or replacing worn out autoclaves to name just a few possibilities is significantly less attractive.
Bank funding downsides
- Variable rate so will increase when Bank of England base rate increases
- Minimum amount for new lend may be far more than needed
- Lots of information required, Slow decision making
- Possible repay of existing CBILS or Bounce Back Loan
- Any security the bank already holds will apply to this new facility plus any other security they may request for the new deal.
Lease UK is here to help!
As an independent broker we have access to a series of European finance houses, who want to fund dental practice equipment via Hire Purchase or Leasing.
Lease UK Asset Finance benefits
- The competition between these keep their rates competitive
- Rates are fixed from activation of the facility so practices can budget
- Funding from £2000 upwards available
- The equipment itself is the main security for the finance – no debentures or charges over residential property are required.
- Underwriting decision usually within 1 working day
- Keeps your bank line free for overdraft increases if needed
Food for thought indeed! Please call us on 01372 466955 to find out more
article by: Chris Weera – Professions Sales Manager
21st September 2022