New Start Finance

Providing your new venture with a variety of funding options at a competitive price

Setting up a new practice is an endeavour requiring skill, thought, planning, and adaptation, and you may consider how to balance the varied costs of starting something new. Using the financial market is a way of managing your cashflow throughout the trajectory of your project, and obtaining help from an external, specialist broker can be another tool rather than standard high-street lending.

Vector Finance can source finance packages with lenders who are comfortable with considering application materials other than established business performance metrics. How your application is presented is important, and we will produce a hand-crafted overview of your new practice, making the lender aware of the strengths of your application, to deliver a finance plan that is competitive and helpful.

Get in touch

what finance products are available to new start practices?

Business loans

Unsecured loans are a way of raising finance quickly for a range of business purposes, which include:

Refurbishment and fit out
Emergency repairs
IT and web development
Intangible assets, such as apparel and perishable supplies

Business loans can be paid directly to the practice or to your vendor.

Equipment finance (hire purchase or leasing)

Hire purchase and leasing is a proactive method of obtaining assets now while maintaining a predictable cashflow over time. Types of equipment that can be finance include:

Diagnostic devices
Monitoring devices
Treatment devices
Air conditioning
Alarm systems
Medical cabinetry

Equipment finance can:

Alleviate cash flow issues if you do not have the liquidity to pay for equipment upfront
Create financial predictivity by fixed payments over a fixed term

What are the advantages and eligibility criteria?

Advantages

Allowing you to start a venture while controlling your initial cashflow, creating capital for your business to grow over time

Flexible payment plans with up to seven-year terms, so you can create a payment plan that suits your business

Tax efficient under current UK legislation

Eligibility Criteria

Registered for 3+ years on your relevant medical register (e.g. GMC, GDC)

At least one director or partner is a homeowner in the UK

A good credit history

Different lenders will have different risk criteria. Compared to established businesses where lenders can evaluate trading performance to meet their risk criteria, lenders are relying on extraneous material to support borrowing. Factors such as your experience, qualifications and net-worth will play a part in demonstrating your eligibility for all finance mediums. This is why a specialist broker like Vector Finance can negotiate directly with lenders to get you the best deal.

Frequently Asked Questions

What information do I need to provide to apply for a finance package?

Lenders do consider application materials other than established business performance metrics, which is important for new start practices. Information that can support an application is:

A business plan
Your practice’s cashflow forecast
Your employment history
Proof of income
Your personal financial commitment to your business
A copy of the lease agreement/head of terms or proof of ownership for the trading premises
Demonstrating your person financial worth through an asset and liabilities statement

What is the difference between hire purchase and lease finance?

Both options require a financial arrangement where you pay a funder over a predetermined term, allowing you to access an investment that you might not be able to afford through cashflow. Leasing means the funder permits usage of the equipment over the timeframe by the practice paying a set rental, and hire purchase is a type of arrangement where a practice buys equipment from the funder over a fixed term, making fixed re-payments.

Which product is best for your practice will depend on variables such as equipment ownership and how you’d like to account for the equipment. Hire purchase is suitable for businesses who want to own the equipment at the end of the fixed term, while leasing is better for businesses less concerned about asset ownership. Leasing does still offer a route for ownership at the end of the fixed term, though it is not automatic and usually for an agreed cost paid by the practice once the agreement ends.

Different types of equipment finance are accounted for differently on your books and tax allowances, and a good idea is speaking to your accountant about what type of asset finance is best for your practice.

What considerations should I make before choosing to apply?

All the finance packages we procure offer fixed payments over a fixed term contract. It is important you understand what the re-payments will be and over what timeframe you will be making those re-payments. Re-payments vary based on the cost of the equipment and interest rate, and reasonable contract lengths are available, which are typically between one- and seven-years.
Whether you select hire purchase, lease, or a loan, your contract will end on a pre-determined date. There are options to settle your contract early and without penalty. Which arrangement you choose will determine what happens at the end of the contract.
Your monthly re-payments should be affordable, and it is important to consider whether the re-payments are manageable over your preferred contract term.
A credit check is made at point of application to establish eligibility for finance. Your credit score effects eligibility and approval for hire purchase and lease.
Finance can offer tax benefits which you could make use of.
Seeking independent guidance to establish which finance product is right for your practice.

Are there any disadvantages of finance?

Applications are subject to a credit check. This may appear on your credit report.
Non-payment can result in you losing the asset through the funder reclaiming the asset. Your credit score could be affected by non-payment.
An administration fee is usually charged at the inception of the agreement.

How does equipment finance affect tax planning?

There will be times when a business decision requires the endorsement of a professional adviser, especially an accountant, who should already know their customer’s exact tax position. Most accountants, tax advisers, finance brokers, and Independent Financial Advisers (IFA’s), will be pleased to provide professional advice and it is recommended this advice is sought.

Most of the major business expenses are linked to new equipment or other material premises costs. As technology improves and new diagnostic equipment is developed, there will be times when new equipment is required. Care should be taken in deciding how to pay for and account for the purchase of new equipment, especially if it is likely to increase income and profit levels in future years. Using cash, loans or HP will ensure high initial First Year Capital Tax Allowances (AIA) may be claimed and this enables a large mitigation of payable tax in the year the investment is made.

Specialist lease Finance will offer a unique spread of tax benefits over the whole term of the contract. Leasing enables a ‘drip-feed’ of tax relief and this is equalised over the entire contract term, typically 2-7 years. Leasing and rental finance contract neatly offsets future profits as a business operating expense at maximum tax rates. Leasing is usually ideal for new start practices.

In most business environments, considerations are made to leasing any equipment or goods that depreciate. This allows any spare cash to be used for more beneficial purposes, such as pension top-ups, general cash flow, software, sundries or paying off lump sums from longer-term and secured business loans.