Has Brexit Affected Business Lending?

Whilst Brexit has created market volatility, Enable Finance and our lending partners are still very much lending… It’s business as usual. 

  • Commercial Mortgages & Property Finance – Brexit has made no impact on Rates or Lending.
  • Asset Finance – Brexit has made no changes, in fact some of our lenders have lowered rates.
  • Cashflow Facilities – Brexit has made no changes to fund working capital.

Brexit or Remain Currency Markets Are Volatile – Enjoy Better For Your Business

With the Brexit polls narrowing it seems like the referendum results are too close to call, which in turn is driving volatility in the currency markets as different polling results are released.

Polls from both ICM and YouGov, showed that the campaign for Britain to leave the European Union has taken a 4-5% lead in the lead up to the June 23 Referendum, which sent sterling towards three-week lows against the US dollar. Of the eight most recently published surveys, one opinion poll was tied, two showed the ‘Remain’ camp ahead and five have showed the ‘Leave’ camp in the lead, including a TNS online poll published on Monday and two previous ICM polls published last Tuesday.

Euro:GBP Brexit Remain

Enjoy Better Corporate Currency Rates Below

GBP:Dollar Brexit Remain

Access Our Specially Negotiated Corporate Foreign Currency Rates

Below are some opinions of 5 top financial institutions on the potential impact of a Brexit on sterling.

  • Goldman Sachs: Estimates drop in the trade-weighted GBP of 15-20%. If the move was uniform across currency pairs, this would take GBP/USD to around 1.15-1.20 and GBP/EUR to around 1.05-1.10
  • Reuters: none of the 45 strategists polled by Reuters said the economy would benefit if the “Out” campaign wins.
  • UBS: Swiss bank UBS say Sterling could fall to parity with the euro if Britain votes to leave the European Union. UBS states the chance that the UK will leave the EU stands at around 40 per cent.
  • HSBC: GBP could lose 20 per cent of its value against the US dollar, the bank believes, sending it towards $1.10 – a level not seen since 1985, when the UK was contending with issues including the miners’ strike.
  • Deutsche: forecasts in a “benign” environment that GBP/USD of $1.28 by the end of 2016 and $1.15 by the end of 2017. In a “non-benign” or “worst-case scenario”, sterling may depreciate an additional 10 per cent.

Images reflect current banks forecasts for currency into early next year. These predications fluctuate regularly based on various data releases. The below strongly suggests the major banks are working on baseline scenario that we will remain in the EU.

Buy To Let Landlords Be Aware Of The Following Income Tax Changes This April 2016

HMRC Tax Changes For Landlords 2016

Novice property investors brace yourself, HMRC could easily trip you up.

I am making you aware of changes affecting landlords of residential property. The last year has seen a significant shift in the landscape for property investors, with the government announcing a number of measures seeking to make “buy-to-let” a less attractive opportunity for the novice investor. I have outlined the key changes below.

Restriction of tax relief on interest costs (residential property)

The most significant change is the restriction of higher-rate interest relief on residential properties. Currently, the full additional costs of financing the property (usually mortgage interest payments) can be deducted when calculating the profits of the rental business. From April 2017, tax relief on interest will be restricted so that taxpayers will only be able to claim tax relief at 20% by April 2020 (rather than the 40% or 45% relief currently available to higher-rate taxpayers).

The restriction of tax relief will have the most significant impact on higher-rate taxpayers who have large mortgages or those with interest-only mortgages. In addition, rather than finance costs being deducted from rental profits (as they currently are), the tax liability in respect of rental profits will be reduced by 20% of the finance costs. The lack of deduction of interest costs at net income level may mean that some landlords find that HMRC’s calculation of their income for the tax year increases and they could find themselves liable for repayment of child tax credits or may have their personal allowance reduced in certain cases.

Removal of the Wear and Tear Allowance

From 6 April 2016, the Wear and Tear Allowance on furnished properties will be replaced by a new deduction for actual replacement expenditure. The new relief will be available to all residential landlords (including landlords of partly furnished or unfurnished properties) and will essentially allow relief for “like-for-like” replacements. This will negatively impact landlords of fully-furnished properties as the replacement relief is likely to be much less generous than the wear and tear allowance. However, it will be of benefit to landlords of unfurnished and partly furnished properties, who currently cannot claim any relief. In practical terms, it may be worth delaying any significantly expenditure on replacement items until after 6 April 2016 and make sure to retain all of your receipts

Rise in stamp duty for Buy To Let & Second Homes 2016

From 1 April 2016, there will be a surcharge of 3% on the stamp duty payable when purchasing a buy-to-let property or second/subsequent home in England and Wales. This represents a significant additional cost when purchasing a new property. The legislation is widely drawn, so it affects those buying a property to live in themselves but who are renting out their previous home. Overseas properties are also taken into account, so holiday home owners will be affected when buying a new house in the UK. In general, the climate is getting more difficult for buy-to-let investors, with the Bank of England now consulting on whether to set limits on buy-to-let loan-to-value ratios and the ratio of rental income to mortgage interest payments.

Brackets Standard rate Buy-to-let/second home rate (April 2016)
Up to £125,000 0% 3%
£125,001 – £250,000 2% 5%
£250,001 – £925,000 5% 8%
£925,001 – £1.5m 10% 13%
over £1.5m 12% 15%

Source: HMRC

Tax commentary provided by Gillian Dudson, Director of Tax at Knowles Warwick Chartered Accountants.

For more information about tax matters and how this affects you please contact Gillian Dudson on 0114 2747576. or visit http://www.knowleswarwick.com/

For Buy To Let Mortgages please call 0114 294 5046

Gillian Dudson, Director of Tax at Knowles Warwick

Why Unsecured Business Loans Could Beat Your Bank

Banks v Unsecured Business Loans

Enable Finance’s director, Phillip Evans, dispels the myths surrounding unsecured business loans.

“History has conditioned the business owner to go to the bank first when seeking financial assistance. This is often a good idea but if the bank manager says no or is not making a fast decision some people assume it is the end of the road for financing. In fact, there are hundreds of alternatives.

“Typically, we can lend up to £250,000 to a trading business via an unsecured business loan, but a lot of people don’t realise this.

“Unsecured business loans are generally described as ‘alternative business finance’ but in actual fact they are pretty mainstream as we are using them so often.

“Typically, banks will lend between £5,000 and £25,000 on an overdraft but they will also take a debenture – or a fixed or floating charge – against your business and may request security by way of a second charge against property, where the overdraft is greater than £25,000. We can provide clients with up to £250,000 with no debenture registered against the company and no fixed or floating charges.

“Yes, we may ask for a personal guarantee from the director, but these guarantees are not supported against property.

“A common misconception is that funding from anywhere other than the bank is more expensive but risk is always profiled on an individual basis whether the customer goes to a bank or another lender – and in many cases alternative finance can be as cost effective, or even cheaper, than bank funding.

On an unsecured loan rates are from 6%. Most of the time there are no early repayment charges and the terms can be spread up to five years.

“Another merit of utilising the alternative finance market is that the technology enables us to give lending decisions more quickly and pay loans out faster. Some of our faster loans pay within 24 hours but the typical time frame is between seven and 14 days from application to loan payment.

“This is not just high risk lending, this is lending for mainstream, active trading businesses. We are not here to take over from the banks but we can add value to the banking facilities businesses already have and help them grow at a faster rate.”

Learn more about unsecured business loans here

New Finance For Engineering and Manufacturing Equipment

engineering and manufacturing equipment finance Enable Finance is really pleased to announce a new financing facility for engineering and manufacturing equipment. The new product range is very competitively priced and our clients will be able to take the funding on a Hire Purchase or Finance Lease agreement and can be used to purchase or refinance new and used equipment. 

Engineering and manufacturing is crucial to the success of the British economy and non more so than here in Sheffield where Enable Finance are headquartered. Asset finance is an important funding solution for small to medium sized businesses and we are pleased to be supporting and helping businesses grow with proper and adequate access to finance. 

Engineering and manufacturing equipment we finance:

  • CNC Slant Bed Lathes
  • Hollow Spindle Lathes
  • Deep Hole Boring Machines 
  • CNC Mills
  • Drills
  • Fabrication & Sheet Metal – Guillotine & Pressbrake
  • Grinders
  • Lathes
  • Milling
  • Cranes
  • Saws

For more information on asset finance follow the link or call one of our business advisors on 0114 2945 046