Buying Guide: Close Brothers Asset Finance
Closing up the gap Close Brothers Asset Finance has a range of options to help operators in the post-pandemic recovery INTERVIEW: JOHN FAWCETT As CEO of Close Brothers Asset Finance’s transport division, John Fawcett is at the forefront of supporting the haulage sector. In this Q&A he shares his thoughts about current trends and demand in finance. CM: What’s been the trend in finance for vehicles, trailers and related equipment since the beginning of the pandemic? JF: Demand dropped in the first lockdown last year but gradually picked up as restrictions lifted and has remained strong ever since, though supply issues are currently impacting on new vehicle finance levels, resulting in the used vehicle market enjoying strong demand. CM: What was the impact on hauliers and how have you been able to help? JF: Many vehicle operators experienced a significant initial impact on work and income in lockdown one last year. Since then, those working with the high street retail, hospitality and entertainment sectors have had many challenges, while those in most other sectors have enjoyed strong demand. We have assisted those in challenged sectors with payment support and CBILS funding, while providing funding for growth in the fleets of those operators doing well. CM: Where are you seeing the greatest demand coming from in the haulage sector now? JF: Currently, the highest levels of demand in this sector are for larger payload capacity vehicles, from long-wheelbase light commercials to the largest tractive units.
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CM: What are the emerging trends for haulage finance as we start to emerge from the Covid crisis? JF: The need for flexible payment structures to match recovering income streams plus seasonal cashflow peaks and troughs to support the affordability of operators’ monthly commitments. CM: How would you expect this to affect demand for finance into the future? JF: We expect the demand for vehicle finance to remain very strong in the future, particularly where lenders can adapt to customers’ changing needs. CM: What are the main products relevant to the haulage sector? JF: There are various products that come under the broad umbrella of asset finance with one of the key ones being refinancing, or capital release as it’s also known; it’s a proven way to make your assets work for you and release cash back into the business. It’s pretty straightforward and involves the finance company purchasing the asset and financing it back to you, with repayments calculated in line
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with the income the asset is expected to generate. And at the end of the refinance term, you own the asset. Other examples of asset finance products include hire purchase, which allows the customer to buy the equipment on credit. The finance company purchases the asset on behalf of the customer and owns the asset until the final instalment is paid, at which point the customer is given the option to buy it. Then there is the finance lease, under which the full value of the equipment is repaid to the finance company with interest over the lease period. At the end of the term, the company can choose to continue to use the asset by entering a secondary rental period; sell the asset and keep a portion of the income from the sale; or return it. At Close Brothers Asset Finance, we ensure each deal is bespoke to a customer’s needs by offering a personal face-to-face or virtual service, and we look outside the box to provide the solution needed. Each product is tailored to the customer’s individual needs – it’s not one-size-fits-all. Our evolution is about ensuring we’re flexible to customers’ changing needs, offering agreements that fit their cash flow requirements at a given point in time, rather than merely providing a standard offering. CM: What does a finance leasing package look like for EVs, given the uncertainty over residual values? JF: We’re looking closely at EVs across all vehicle classes and are committed to providing scalable funding on them. We continue to research and work with partners who can give us the insight and knowledge we need to confidently lend on the right EVs. Commercial EVs are still in their infancy but we already have significant experience in, among others, the London electric taxi market, which has launched viable EVs. At Close Brothers Asset Finance, we are ready to champion this transition for hauliers by working with them to provide the right structured finance solutions for them.
