It’s a harsh reality, but unfortunately, many banks and mainstream leasing companies simply don’t provide lease finance for a new start businesses.
Why is it typically harder for a new start-up business to obtain a leasing deal? Well, given that statistically four out of five new start companies do not make their 5th anniversary, the reasons start to become clear.
However leasing is a great way for new businesses to obtain the capital equipment, the IT or even the office or shop fit out they need without tying up cash and using up other lines of credit. So if you are an SME and a new start-up that would like to secure a leasing deal, here are some golden rules to follow:
7 Golden Rules for New Start-Ups That Want To Lease Capital Equipment
- First and foremost, even if you are a limited company, personal guarantees will invariably be required for new start companies. The leasing company will need you to be a home owner. However, if you are not, it is possible to offer a third party guarantee, for example, from a family member.
- A leasing company will ask your permission to carry out a personal credit search to establish how good your credit rating is. So verify your personal credit check is clean and that you have no missed payments or County Court Judgements against your name. If this is not the case, you will need to be prepared to answer questions about it.
- You should be able to provide the leasing company with either business and/or personal bank statements showing that your account(s) are well managed.
- It is always useful, if possible, to show the leasing company that you are putting funds into the business or you have other financial banking, for example, from your bank.
- Do you have a business plan? Even if this is just a fairly basic outline, it will help your cause by showing the lender that you have thought about your business.
- Can you explain with conviction why you are looking to buy a particular asset and what the financial benefits your business expects from it?
- Can you offer a deposit? Asking to lease an asset with a capital value of £10,000, but with only £250 deposit available to put down obviously presents a much higher risk (for the leasing company) than providing a deposit of £2,500. So always think about how much deposit you can offer in advance.
As a leading UK leasing company, WestWon is keen to support leasing for new start companies. We applaud the ‘entrepreneurial spirit’, which has a vital role to play in driving the wider economy forward.
For more information about our best leasing deals for new start companies, please call WestWon on Tel: 01494 611 456 or email boris@WestWon.co.uk