UK dentists apply for lease holidays in numbers
With dental practices across the UK unable to open and therefore not able to generate income, many UK dentists have applied for a six month holiday period on equipment leases and practice loans.
In this blog we look to explain what is happening in the UK leasing and asset finance sector specifically for dentists.
What is a lease holiday?
A lease holiday, also known as a ‘forbearance request’, is a way that a dental practise can save on cash flow for a predetermined time period whilst not defaulting or terminating a lease agreement.
Your lease agreement will stay in place and most funders will grant a six-month period where you make no lease repayments. They simply extend the lease term by the same amount of time at the back end of the agreement. However, some will continue to charge interest during the forbearance period.
How to apply for a lease holiday and what not to do
Simply terminating a direct debit and hoping for the best is not the right course of action for a dentist looking to reduce overheads.
Applying for a lease holiday is simple, just contact your leasing company and quote your agreement number. Do not be concerned if they do not come back to you immediately, they are still shifting through thousands of requests.
You are not alone…
Leasing companies have been inundated with holiday requests. The last count was 416,000 lease holiday requests in the UK. Breaking this down, many are from individuals with a car lease agreement. However, there must be over 200,000 business related forbearance requests over the last six weeks.
In summary, if you have applied for a lease holiday request, you are not alone. This is a UK wide issue that affects large companies just as much as a one-person dental practice.
How are UK leasing companies responding and what are they doing?
We have had many conversations with UK leasing funders. In general, they have been amazing, acting in a highly professional and fair way. Their only issue has been customer service.
Often these lease funders have a very small team in customer services, as 98% of companies just pay their direct debit on time and in full under normal economic circumstances.
We have heard stories of funders seeing 66% of their client base asking for a lease holiday. They have reallocated team members to deal with these requests, but often still have a backlog to deal with.
Two funders we work with just offer a three-month holiday period and add the rentals onto the end of the agreement. They make no additional charge for interest.
Some just ask for the interest element to be paid, hence significantly reducing the rental repayment.
One funder is just asking their clients to make a very small monthly repayment. This is designed for them to ensure the direct debit is still live and the business exists.
At the other extreme, we have seen a few finance companies asking for a big questionnaire to be completed, asking;
- Why do you need a holiday payment plan?
- What are the effects on your business?
- Please supply your business plan, bank statements
In summary, they are making it a little bit difficult for you to get a holiday rental on your lease.
We have not heard of any finance company asking for an administration fee to cover their admin costs.
It’s about being fair and reasonable
One client (not a dentist) applied for a lease holiday request on his £200k Rolls Royce. When questioned, it did come out the individual in question was just “joining in with the stampede and trying it on”. This is one reason why some leasing companies are asking for more information, they are trying to cut out those companies who do not really need a lease repayment holiday.
From what we can see, the UK leasing sector can hold their head up high and be proud that they are acting in the clients best interest. If your request is fair and reasonable, your leasing provider will help you out.
Free advice if you wish to apply for a lease holiday request
All UK dentists and business, please get in touch. We are happy to provide free independent advice on dealing with your lease holiday / forbearance request, please call us on 01494 611 456. We wish to do our part to help UK business and promote the good work of leasing companies in general.
