The UK Government announced a new capital allowances
relief. From 1 April 2021 until 31 March 2023, companies investing in
qualifying new plant and machinery assets will be able to claim:
130% super-deduction capital allowance on qualifying
plant and machinery investments
50% first-year allowance for qualifying special
rate assets
This super-deduction is designed to promote companies to
invest in productivity enhancing plant and machinery. It is important businesses understand and take advantage of these generous new reliefs while
they are available.
The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, ensuring the UK capital allowances
regime is amongst the world’s most competitive. There is no upper limit set for the expenditure, so as long
the expenditure is incurred between 1 April 2021 – 31 March 2023. The enhanced
relief also does not allow for plant and machinery that will be made available
for leasing (including landlord fixtures within rented property) and excludes
cars.
The pandemic has been a big blow for a lot of businesses,
if you have been looking at equipment to help you grow, now may be the time to
use this relief. If you are not sure on whether it is the right time to make a
purchase, or if the equipment qualifies for the super-deduction relief, message
us on nicola@crossaccountingservice.co.uk or if
you would prefer to chat, call Cardiff: 02920 653 995 or Bridgend: 01656 530
063. Our team is always happy to help.
2019 has not
been the easiest of years for many of our clients, the lengthy political and
economic uncertainty is making the general public think a lot more about
spending their hard-earned money. Small
businesses are having to renegotiate with their suppliers and look at all their
costs to ride the storm we find ourselves in at the moment.
Not ones to
sit down and wait for things to happen, this blog is about refinancing. 2019 may not
have been the best year, but let’s not sit and see if 2020 will be better. Now
is the time to review your finances. Autumn is a great time of year to look at this,
you’re halfway through the financial year, summer is over, and Christmas is
around the corner, the end of the year will be here before you know it.
So,
what is refinancing?
Refinancing
is the process of replacing an existing loan with a new loan. Typically, people
refinance so they can get a better deal on their current loan. For example, you
may be able to get a better interest rate than what you are on currently,
saving you money. Refinancing also depends on your credit score, current deal
and many other factors.
You may also
have some assets in your business currently tying up cash and want to get a
loan to put more liquid cash into the business, to allow you to put some plans
for 2020 into practise right now.
Why
refinance?
If you have
a loan or a mortgage, it is worth speaking to the provider for refinancing.
Some potential advantage of refinancing includes:
Lowering your monthly payments. You can then put
to use your extra saving to pay off other debts or towards your saving goals.
You can combine your debts into one with some
refinancing options. This is good so you know exactly when payments need to be
made.
Usually able to negotiate lower interest rates.
Cashflow is tight but you have some assets that
can assist you gain some cash to put back into the business.
Studies have
shown that trying to negotiate a better refinancing deal tends to save people
money and a lot of stress. Some questions to ask yourself is if you are paying
too much monthly on any equipment that you could possibly lower or if you are
too dependent on your bank overdraft as it is one of the most expensive bowing
methods. Knowing where all your finances lay can help you budget and with the
extra cash you can invest in yourself or your business.
Mortgages
are the cheapest form of loans, credit cards tend to be the most expensive. It may
be a time to sit down with your bank manager or even your accountant and look
at the best ways of saving yourself some interest along the way.
Typically,
business owners who plan ahead with their finances and put plans together not
only achieve their plans, but tend to be charged less by the banks for the privilege
of lending money from them.
So what are
you doing, get planning 2020 is going to be an amazing year, let it be a good
one for you.
Welcome to
our latest blog. Christmas is around the corner and it’s our favourite time of
the year here at Cross Accounting. It’s the time of giving and is there any
other way to give your business a boost a grant to get your finance in place.
A business
or an individual will be given a sum of money for a specific project or
purpose. A grant usually covers only partial costs involved. Grants are given depending
on your business activity, the amount of jobs that will be created due to this
investment or if you are in a specific industry sector. Sometimes grants are
linked to geographic areas. Such as those areas in need of an economic
transformation.
You should
ensure that you meet the requirements of the scheme before applying for grants
and finance. You’ll have to ensure you are ready to put up some of your own
money as grants only cover partial costs. You’ll also need to have a detailed
description of your project or purpose and a work plan with full costings. We
can assist with a budget and full detailed cashflow to secure the finance you
need.
The
application process for grants can sometimes be time consuming and there
usually is a lot of competition but on the plus side, most grants don’t have to
be paid repaid giving your business that extra boost.
If you’re
looking for that push to reach some New Years goals, the Development Bank of
Wales can support to get the finance your business needs to succeed. Visit https://developmentbank.wales/ to get
you ready for the New Year.
You will
need to have a polished business plan at the ready. If you would like us to look at your business plan,
then you can book in for a free one-hour consultation where we can discuss how
to start the New Year strong. Visit our website on www.crossaccountingservice.co.uk
or call us on 02920 653 995. We wish you all a Merry Christmas and a prosperous
New Year.
In our
latest blog, we talk about the best methods of finance for your business.
Sometimes it’s great to have that extra push to take your business to the next
level. To attract the best funding for your business, you will need a business
plan. We are experts in the field of preparing a cashflow and a business plan
and can assist you in achieving the best method of finance for your business.
Finance
Wales
Finance
Wales are set up to aid in funding. They offer bespoke debt and equity
investment packages designed to boost your business and accelerate growth. They
offer three types of packages, micro loans under £10,000 have an easy two-day
process. Have a look at their website,
Bank loans
are probably the most common types of finance for you and I. These types of
finance are an amount of money borrowed for a set period with an agreed
repayment schedule. The repayment amount will depend upon the size and duration
of the loan and rate of interest. The terms and price will vary between bank
providers. There isn’t just one type of loan, there are many different types,
which I will look in to and describe the differences.
·Working Capital Loan – This type of loan
is usually required at short notice or emergency situations. This will usually
incur the highest percentage of interest.
·Fixed Asset Loan – For buying assets,
where the asset itself is used as a security for repayment.
·Factoring Loans – This type of loan is
based on money owed to your business by customers or clients.
·Hire Purchase Loans – For long term
purchase of assets such as vehicles or machinery.
It’s best to
talk to your bank or bank manager, as they will let you know the exact amount
you can get for finance. The bank managers love an excellent business plan and
cashflow, so make sure yours is current and polished to get in the good books
of your bank manager!
Overdraft
This method
of finance is a sum of money extended to you as credit by your bank, set at a
pre-arranged limit when your account balance drops below zero. Usually charged
interest on any amount of overdraft you use. The terms and price, like the
loans, vary between providers. This is a good source to manage cashflow, but it
is probably not suitable if you’re looking for long term financing.
Crowdfunding
Crowdfunding,
also known as crowd financing or crowd sourced capital is usually carried out online.
This allows several investors to individually invest smaller amounts of money
in to a business. The individual investments are then combined to help a
business reach its funding target. Crowdfunding is an excellent option for
businesses that struggle to raise finance through loans or the conventional
funding methods. Since crowdfunding is conducted online, you should make sure
your idea is protected. In return of the funding, investors usually get a
percentage of share of the business.
Governments
usually offer support to businesses in all different shapes and sizes. https://www.gov.uk/business-finance-support
here you can find from funding and finance, to grants and to mentoring for your
business.
Caerphilly
council are offering a business development grant. This grant can provide up to
45% of eligible expenditure to a maximum of £2,000. Business must be based in
Caerphilly and be in the manufacturing or service to the manufacturing sector,
or have a minimum of 60% business to business. For businesses in the Caerphilly
area, please look at this link http://www.caerphilly.gov.uk/Business/Business-grants-and-funding/Business-development-grant
to get more information.
Remember the
key to accelerating your business in the positive forward thinking way to get
that extra push is to have a business plan and cashflow in place. We offer a
one hour no obligation consultation, where we can sit down with a cup of coffee
and discuss your business.
Potential investors and lenders will look closely at your business plan to help them decide whether to risk their money.
There is no standard format but most plans include:
An executive summary highlighting the main points - to catch people's attention.
Details of key personnel with an organisational chart showing individual responsibilities.
Market research - details of competitors and how your product or service fits into the market - eg who your potential customers are and why you think they will buy your product or service.
Your marketing plan - how you are going to get your product or service in front of potential customers, together with any assumptions made when setting your targets.
Financial information - eg key ratios. These can be used to compare your business' performance against industry benchmarks. It's also a good idea to give details of any major expenditure you have made on long-term assets and explain the reasons behind any changes in working capital items, such as stock, debtors and creditors. Remember to include balance sheet and profit and loss account details. Many lenders ask for three years' financial information. If this is not available, supply details about trading to date.
How you will manage credit, expenditure, stock planning and control, and debtors and creditors.
When seeking funding, include:
A cashflow forecast indicating the amount of funding you need and why. For a start-up, include estimates of how much finance you will require for two to three years or until you start to make a profit. Indicate contingency funds that might be needed for rough patches. This is usually between 10 and 20 per cent of the total funding requirement. See our guide on cashflow management: the basics.
Financial forecasts for a three to five-year period. Try to present this information in the same way as historical financial information, so that straightforward comparisons can be made.
How a loan will be repaid, how investors can get their money back, and when.
Sources of fund are available in the form of
Bank financing in the form of Invoice financing. This allows you to raise your sales invoice and use a bank or a finance company to get a large percentage of the income immediately. Which will allow you to ease your cashflow
Overdraft facility with the bank - this is normally short term and can be recalled on demand.
A secured long term loan funding equipment or property.
Car financing with your local bank or car retail store.
There is some financial assistance to companies based in deprived areas for equipment, websites and training needs for staff. These are very few and far between and strict rules apply.
There is business assistance and courses available for new start up businesses in the Cardiff and Wales areas. www.businessinfocus.co.uk
Equity financing. This is related to gaining finance from private investors, they take a percentage of your company. In return you get business advice and mentoring, along with funding. This option is normally suitable to fund large expansion plans, or to take your business global. There is normally a contract in place confirming payback terms, interest and purchase of your shares back.
The Business Link website has an article dedication to informing small businesses about financing available.
All investors assess applications for loans or investments using different criteria, and you should ensure you are aware of any specific requirements before making your application to particular lenders or investors.
However, if you are applying for finance from a bank or just setting up a new business bank account, there are some general points that almost every investor will want to take into account:
a good financial track record and credit history for you and your business – see the page in this guide about credit rating and scoring
a good management team with the right skills and expertise – involve your senior team from the start
a business plan that shows clear thinking on ideas and strategy – this is an essential tool for your business and should include up-to-date financial information
commitment from management and (as appropriate) other shareholders - the investor will need to be assured that the investment is one that everyone at the top of the business is happy about
security - most lenders will want their money to be secured against tangible assets, so they can be sure of getting their money back
your understanding of your market - the investor will probably want to make their own investigations of the market, but will need to know that you understand it as well
Even if your proposition is good, there are some things which will weigh against an application for loans or other funding:
unauthorised overdrafts
missed loan repayments
County Court judgements against the business or its directors
adverse credit rating data, against the business or its directors
This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.
