1. Geography
We prefer proposals for stronger credits based in Scotland i.e local authorities, PLC’s, multi partnered professional firms and very well established profitable SME’s with a strong balance sheet. We do not transact business in Northern Ireland.
2. Time Trading
We will consider established businesses (over three years trading) and selected new start businesses (defined as less than 3 years trading in the current business).
3. Proposal Values
Minimum value £3,000
Maximum value £100,000 (exceptions may be made for an undoubted credit risk).
4. Business Sector Exclusions
We will not currently lend into the following sectors, either due to the general poor financial health of the sector or due to our own specific bad experience of the sector:
- Catering Event Companies & Outside Caterers
- Couriers
- Home based Cleaning Business
- Loan & Mortgage Brokers
- Small Charities & “Limited by Guarantee” Companies
- Tenanted Public Houses and Social / Working Men’s Clubs
- Window Cleaners
- Government funded Schools & Academies (due to Dept of Education policy)
5. Industries where at least 3 years Trading is Generally Required –
In our view the following sectors represent a particularly high risk in their development stage so we generally insist on at least 3 years trading, although exceptions may be made for well capitalised businesses and for businesses that can be proven to be trading successfully.
- Building & Construction Trade
- Coffee Shops
- Fast Food Outlets (except as part of a national franchise)
- Gymnasiums and Health Clubs
- Hairdressers & Beauty Salons
- Hauliers
- Nightclubs
- Printers
- Public Houses
- Recruitment & Employment Agencies
- Serviced Office Operators
6. New Starts
For all new start and recently established businesses, we require a full supporting write up on the individuals behind the business, any relevant experience in owning an existing or previous successful business, personal net worth statements and their last 3 months personal bank statements. The more relevant information provided, then the better the prospect is of an acceptance being forthcoming.
7. Maximum Lease Period
We prefer to write business over periods of up to 3 years, but we will go to a maximum 5 year term if the credit risk and the useful life of the equipment to be financed justifies it. Businesses trading for under 3 years will be restricted to a maximum 3 year lease period.
8. Asset Type Exclusions
We do not currently finance:
- ATMs
- Audio visual equipment into pubs
- Laser Machines or similar types of “body” enhancement equipment”
- Search engine optimisation ostware (SEO) or website software
- Marquees
- Slush & Iced Drinks Machines
- Sunbeds and Tanning Equipment
- Any asset where the concept of the sale is not essential to the business eg; revenue to be derived from the lease of plasma screens / vending equipment into a company that expects advertising or user charges to cover the lease rental
9. Asset Types
Other than those assets stated in section 8 above, we will consider any bona fide business asset including Cars up to 3 years old, Commercial vehicles up to 5 years old *see note 17* and Energy Saving Products such as Biomass boilers + Solar Panels (we will usually require the Hirer to own the building were the asset is to be situated).
10. Homeowners
All Sole Traders/Partnership hirers and all Limited Company/LLP guarantors must be UK homeowners. We will verify wherever possible with the Land Registry and will require evidence if our LR search returns “no trace”.
11. Guarantees & Indemnities
Guarantees will be requested for the majority of proposals for small.medium owner managed limited companies and LLPs, although exceptions may be made for stronger credit risks, As a general working rule we will not lend more than 15k per guarantor (this maximum sum will not be doubled for a financially associated partnership such as a husband & wife), although we will consider higher amounts depending on the personal net worth of a prospective guarantor (an Asset & Liability Statement will usually be required). We will also consider higher values if the asset has an obvious recognisable value in a repossession scenario (Cars/Commercials etc).
12. Adverse Credit
We will not lend if there are serious late payments, defaults, unsatisfied CCJ’s, Bankruptcy Orders or IVAs showing on a credit search. We will also decline in all cases where the business owner/proposed guarantor has been the owner or an officer of a previously failed company in recent years.
13. Accounting Information
Auditor produced accounting information must be no more than 18 months old and we will also require the latest management accounts to be provided.
14. Bank Statements
For all businesses trading less than 3 years we require the last 3 months bank statements. For businesses trading over 3 years, it is not essential to submit bank statements with the proposal, but we will often request sight of bank statements, in order to establish current affordability and trends, particularly when accounting information is out of date.
15. Dealers and Suppliers
We look closely at all equipment suppliers, but particularly for regulated deals where the financier and dealer / supplier have equal liability under section 75 of the CCA 1974.
It should be noted that we will not consider proposals from photocopier, telecoms, tracking & vending suppliers that have traded for less than 3 years. Similarly, any hirer introduced by a photocopier, telecoms, tracking or vending supplier must have traded for at least 3 years.
Where the supplier is weak or considered unsuitable we may consider the proposal on a sale and leaseback basis.
16. Sale & Leaseback
We will consider Sale & Leaseback proposals where the original invoice is available for our retention and the equipment is no more than 12 motnhs old. Generally a minimum IRR of 18% will apply and Guarantees will be mandatory for corporate entities.
This facility can also be used in circumstances where the equipment supplier is based outside the UK and the customer has had to make payment in advance of the equipment being dispatched. Standard rates will apply in this event.
17. Balloon Payment Finance
We will consider proposals for the financing of balloon payments due on vehicle contracts previously entered into with other financiers.
18. Secured Transactions
We will consider larger values than might otherwise be the case in a specific scenario, if we are offered a legal charge over a suitable residential property. For guidance, including the value of our prospective charge, the loan to valuation ratio must not exceed 75% of the current property value. All legal and valuation expenses must be borne by the Customer and all existing charge-holders must formally consent to Kingsway’s new charge. We will only take a legal charge over registered English or Welsh property.
