Vocabulary:

… has also urged banks to speed up their bad-loan disposals - … также настоятельно рекомендовал банкам поскорее списать сомнительные долги

nonperforming loans - реально не функционирующиe (займы, по которым не выплачиваются проценты)

excise bad debts – списать сомнительные долги

close their books - подвести итог ( подвести итоги по данным в бухгалтерских книгах и вывести сальдо по балансу в конце отчетного периода )

cash-strapped banks – банки, нуждающиеся в денежных средствах

nitty-gritty of re­forms – суть реформ

moral hazard - моральный риск, угроза недобросовестности ( вероятность того, что само существование контракта приведет к изменению поведения одной или всех сторон контракта (например, вероятность того, что наличие страховки изменит поведение застрахованного лица в сторону увеличения риска)

bail out – оказывать помощь при выходе из сложной финансовой ситуации (часто со стороны государства)

address the matter - обращать внимание на; задумываться о; заняться решением проблемы

benighted – некомпетентный

62. Asset Finance

This can be one of the most cost efficient ways for small or medium-sized businesses to get assets to help them grow. So make sure your clients are aware of the choices available

Every year it's estimated that almost £27bn is spent by businesses on assets - such as machinery, tools, cars, vans or IT equipment - 27% of which is spent by companies with a turnover of less than £1m.

"All businesses need assets to operate and grow, as well as working capital. This is where asset finance can help," says Marc Dryden, Director, Network Sales, Lombard. "We view asset finance as a source of credit that preserves working capital and eases cashflow."

Growing businesses need finance that doesn't eat into their cash reserves, that's quantifiable and tax efficient. The standard options are buy, borrow, or lease and they all have their own pros and cons:

• Buying outright means capital allowance can be claimed, but it eats into working capital, plus there are the upkeep costs.

• Leasing, which usually just applies to tangible assets such as cars, plant and machinery and IT equipment, spreads costs over a fixed period, but may require a deposit to be paid up front. However, you can claim capital allowances, the interest paid can be deducted from taxable profits as a trading expense and upkeep of the asset is handled by the leasing firm.

• Borrowing works like leasing, but applies to any form of asset, including property, although upkeep is down to the borrower. It also isn't necessarily limited to assets. Take the Flexible Business Loan from NatWest, for example, which can finance anything from new equipment to taking on more staff. It can also offer more flexibility with regards to repayment options than other finance sources, such as repayment holidays, the ability to change repayment amounts and frequency of repayments.

Tailored to the business

Asset finance is a hybrid of leasing and borrowing, and as with these options, costs can be spread. What's more, with some lenders repayments can be made to coincide with incoming revenue.

Asset finance also works at a fixed rate, the contracts can be suited to the business and the asset, and as it is independent, it does not require companies to open an account. In addition, the upkeep of the asset is performed by the asset company. Although businesses never own the assets, they can still reduce their tax bill by choosing a borrowing or leasing option, as some or all of the cost is deductible as a business expense.

As the asset is handed back once the contract ends, asset financing usually involves lower deposits and monthly payments than loans or hire purchase, there are no resale problems and if the asset is used for business, between 50% and 100% of the VAT paid on rentals can be claimed back.

Businesses can also take advantage of the asset finance company's buying power and its subsequent service and maintenance. So the monthly price a company pays with asset finance should be lower than anything offered elsewhere.

Broad coverage

Any tangible asset with a readily available resale market is ideal for asset finance, such as vehicles, IT equipment, construction equipment and marine products. Vehicles is the biggest sector, taking £19bn of the £27bn of asset finance provided last year, and third-party finance was used for almost 50% of all new car registrations in 2005.

A traditional criticism of asset finance was that it was only for established companies borrowing large sums. This is no longer the case, according to Dryden. "Every client is suitable, but to make it viable, we look for a capital expenditure of around £15-20,000," he says.

Asset finance is different from a bank loan or an overdraft where the loan is unsecured. The security is the asset. "If we can identify it we are happy to fund it, so it shouldn't matter how old the company is," says Dryden. "We take each case on its own merits and tailor the facility to suit."

Lombard differs from other asset finance companies in a few notable ways. "We can put a relationship manager with a customer anywhere in the UK, and will try to meet face to face rather than talk on the phone, which is unique to us," explains Dryden.

This also works well for advisors and brokers. "We can make contact with a client almost immediately," says Dryden. This immediacy also applies to the speed at which a finance application is dealt with. Lombard would hope to get payment approved within 24 hours, and could get finance available in a similar time frame depending on the company and the amount required.