Businesses are selling and Banks are lending - Ernest Wilsons view

Business sales at Ernest Wilsons continue on a pace and along with that the days seem to be one long conversation about finance! Which is great! Lloyds TSB Commercial certainly seem to have a renewed appetite for Enterprise Guarantee Scheme (EFG) Loan funding and the Government’s Funding for Lending Scheme is helping bring EFG pricing right down to that of conventional secured loans. Plus I understand the 1.5% arrangement fee is waived for all applications before the 1st March 2013 – and quite a few are taking advantage of that! Certainly it is pleasing to see an increasing number of loans being approved for Business purchase.
This last week a 21 year old young man was appointed as a Subpostmaster in a nearby Sub Post Office that is to be transferred from the current scale payment contract to a new “Local” contract – well done to him. He used our “Buying a Sub Post Office Support Service” which put him in the best position to present most professionally at the Post Office interview which for him lasted 2 hours! It is such a satisfying conversation to have when the call comes in “I got it!” A customer showed me recently a Fixed Rate Business Loan agreement which appeared to have an “embedded derivative” written into it (rather than a separate hedging agreement covered by MiFID)– certainly the advised breakage fees were astronomical and lent weight to this interpretation – I wonder how many other of the Banks business customers think they have a “bob standard” fixed rate business loan but it actually incorporates breakage clauses like this which are linked to prevailing market rates! They will certainly get a shock when they come to repay the loan whilst base rates are so low – as this client certainly did. I notice from a simple internet search that there is a growing movement highlighting this issue.

If you have any questions or need assistance with buying a Sub Post Office or indeed with the raising of finance for any business purchase do not hesitate to telephone me on 0113 238 2900 or email me at martin.humberstone@ernest-wilson.co.uk