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What are my payment options if I have a business finance agreement?

One of the questions I’ve been asked a lot by clients over the last few weeks has been surrounding payment options for the vehicle or asset they have on finance.

With many businesses impacted, from coach companies who can longer operate the school run to maintenance companies whose equipment cannot be used until restrictions are lifted, keeping up monthly payments is an area of concern.

If we’ve already spoken, then you will be aware that the finance companies are treating this situation with sympathy and have been very accommodating to those who are looking for a solution.

What are the options around my payments?

Many finance companies are offering our customers the option to either defer or reduce payments. You may have seen the defer option referred to as a ‘payment holiday’.

How does this work?

As an example, if you have a 24-month contract in place that had just started this month and were offered 3 months of deferred payments from now, you would be left with 21 months.

Rather than your contract ending in April 2022, it would end in July 2022. The ‘holiday’ means the unpaid months are added to the end of your agreement.

What do I need to be aware of?

You need to be aware that finance companies are treating every case on an individual basis and will be assessing business disruption based upon your own circumstances. Incremental interest may also be added.

The main thing to consider right now is the future of your company. Taking a holiday from payments may seem like a good idea now but if you can continue to pay, perhaps at a reduced rate, would that be more appropriate? Again, this is entirely dependent on individual circumstances and cashflow.

Another factor to consider is to diversify your market. Now you may have more time to be able to focus on planning for the future, are there other avenues you could consider, or industries you could service to help you spread the risk and avoid focusing on one sole source of income?

It is great to have a niche but in when we’re faced with a situation like the one we find ourselves in, it is safer to have a range of customers and suppliers rather than rely on one for all your revenue, because if something happens to them, it impacts you much more.

With many clients contacting their finance provider at this time, be aware that you will face delays and that on average they’re taking around 10 days to look at individual cases with such a high volume of enquiries to assess.

If you need to discuss payment options, please don’t hesitate to contact me initially for some further advice on the above if this would be useful for you and then you may be in a better position to discuss with the finance provider.