For Businesses
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A metal merchant was referred to Spark through Spark Connect by a vehicle supplier.
The client wanted to purchase a used vehicle, was happy to put down a 20% deposit and aimed to finance the remaining amount ideally over 2-3 years.
The business:
The vehicle chosen was over 10 years old and had close to 100,000 miles on the clock. Although the client initially sought asset finance, the high mileage made this option impractical.
Asset finance lenders consider the vehicle’s value as security and need to ensure they can recover and resell it in case of payment default. High mileage makes resale more challenging, leading to a ceiling on mileage for funded vehicles.
Given these constraints, Spark’s team identified an unsecured business loan as a more suitable solution. Unlike asset finance, unsecured business loans are based on affordability and other business criteria rather than the asset's value.
Spark’s team quickly shifted to the unsecured loan option. The business was approved, and the funds were in their account within three working days. This swift and efficient solution allowed the metal merchant to proceed with the vehicle purchase without any delays.
This case highlights how the most apparent financing product isn't always the ideal choice. By understanding the unique needs and constraints of the client, Spark was able to provide a tailored solution, ensuring the client’s objectives were met efficiently and effectively.
Asset Finance:
Relies on the asset's value as collateral.
Secure form of lending for assets with lower mileage and higher resale value.
Less likely to approve high-mileage vehicles due to decreased resale potential and increased risk.
Unsecured Business Loan:
Based on the business’s overall financial health and affordability.
Does not depend on the value of the specific asset.
Offers more flexibility, ideal when the asset's condition does not meet asset finance lenders' criteria.
In this case, the unsecured business loan was the better option. It was based on the business's profitability and the directors' homeowner status, rather than the vehicle's high mileage, which would have disqualified it from asset finance.
As a founder of multiple businesses, Jamie believes that mindset, discipline and ambition are key drivers for success, both for his businesses and for his clients.
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