Chris Roberts, head of origination at CODE Investing, on how fleet refinancing can bring multiple benefits for fleets.
Few readers of Fleet World will need me to tell them about how to finance their vehicles. Many have likely been doing it for a number of years, have preferred providers, and will be dab hands on that front.
They’ll know the market inside out and will gravitate to lenders that offer four key ingredients: competitive rates (as low as 4.75%), speed of delivery, high quality service levels and, arguably most importantly, having the actual underwriter, aka decision-maker, at the end of the phone.
But in recent dealings with a number of companies looking to refinance their fleets, what has struck me is the way that the vast majority do not use it as an opportunity to take a broader, deeper and more holistic look at their finances.
It’s certainly worth doing and can drive not just savings but opportunities. There’s no question that a relatively vanilla but cyclical fleet refinance event can be the perfect time to optimise your wider debt portfolio, potentially reducing operational costs, look at ways to improve your company’s overall liquidity and, more fundamentally, realise your growth ambitions.
For example, a growing number of institutional lenders we have access to are now providing unsecured loans with rates starting from as little as 6%. And since the terms on these products can be as much as eight years, they can easily be synced with a fleet loan (re)finance package.
These unsecured loans can be used for no end of reasons: as growth capital, for example to scale up a fleet and hire accordingly, to acquire additional plant, a competitor, or to inject funds into other areas of the business that need prioritising.
Effectively, a relatively vanilla event can be used to give your firm some va va voom. And with some of the institutional lenders we have access to now offering unsecured (yes, unsecured) loans to established businesses of up to £5m, that can be a huge boost.
Critically, these lenders will also provide finance without a warranty, debenture and personal guarantee (PG), providing all-important peace of mind. PGs in particular are one of the main reasons many companies hesitate when considering growth capital. It’s a risk the directors understandably don’t want to take.
I suppose all I’m really saying is that when you’re next refinancing your fleet, whatever and however big it may be, treat that process as an opportunity not just to spring clean your broader debt portfolio but see how if it can be a springboard for future growth.