Ready for your next step?
In terms of equipping and fitting out the business, it is vital to team up with a finance provider that understands your industry, the equipment, the suppliers, the various funding options, and the tax relief considerations during this important step in your career.
You are more likely to be approved if you are * Qualified * Experienced * UK resident for at least 3 years.
The key advantages of equipment finance include:
Usually 100% (or more) tax efficient.
Finance the full value of the equipment and protect your working capital. Deposits are not usually required.
Flexible terms: equipment can be funded anywhere between 6 months and 7 years. The equipment is revenue-generating from day one, but the initial costs are spread evenly over the term.
Credit approvals are usually achieved within 48 hours from receiving the information.
Finance acceptances last for a minimum of 3-months giving you plenty of flexibility with the refurbishment and installation process.
With Performance Finance, all facilities come with an option to take ownership at the end of the agreement. No peppercorn or lifetime rentals.
Leasing usually out performs traditional bank loans for new start practices.
It is of utmost importance to consider the VAT implications when purchasing sight test equipment and partially allowable items such as shop-fit and IT/Phone systems. With either a cash purchase/bank loan/overdraft the VAT is applicable from day one and could push you over the VAT de Minimis threshold. For more information on VAT de Minimis, see below:
With a Finance Lease facility, the VAT is spread over the term of the agreement and therefore minimises the impact on your VAT de Minimis limit.
With regards to tax relief, you are not claiming capital allowances. Instead, you allocate the monthly payment into the profit and loss section of your financial statements, the repayments are a business expense and therefore achieve 100% tax efficiency. Crucially though, the tax relief is spread out over the term so you can offset against profits in future years when the practice is more established.
A cash purchase/bank loan/overdraft etc would usually see your accountant claiming capital allowances, or super-deduction, see below:
Super-deduction Tax Relief
These capital allowance tax relief schemes are excellent for businesses with existing profits because they enable tax relief in the next accounting period. If you are new start practice or high growth business this is potentially wasted in your first year due to the lack of initial profitability.
When applying, lenders would expect the following information:
1. Business plan / Executive summary
2. Cash flow forecast
3. “Shopping list” (Ballpark information relating to what equipment you are looking to fund)
4. Proof of income (Accounts/Payslips/Tax Return)
5. Bank Statements
6. Confirmation of any personal funds being committed to the project.
Performance Finance use both a panel of external funders and provide funds directly so we can offer an insight into the underwriting process.
As a starting point, most underwriters would want applicants to:
Be a registered dispensing optician or optometrist with the GOC
Have experience as an employed or locum dispensing optician or optometrist (with a view to continuing some of this role)
UK resident for at least 3 years
Have a good credit history
Business Plans / Executive Summaries
The term “business plan” can be quite daunting, historically this document would have been a weighty tome filled with pie charts and reams of data from the internet.
Nowadays, however, underwriters are looking for a summary of your background, the project and how you are going to make it a success, e.g:
Qualifications and background i.e., CV/bio.
The location: where are you setting up and why, high street location, parking, close to existing associate positions, what about the competition?
How are you going to make this a success? Marketing plans, attracting an existing patient base etc
How much of your own funds are you committing to this and how will this be allocated to the other start-up costs?
An important part of the business is how you plan to man the new practice, staffing levels and costs, are you going to maintain an Assoc position so you can maintain an income/lifestyle etc…
Creating a simple but effective business plan or executive summary will enable you to create your own roadmap for the practice whilst presenting a clear proposition to potential funders.
A cash-flow forecast is the most important indicator to highlight any shortfall in cash balances for your business.
The forecast will help you see where cash flow might be tight so you can plan ahead.
Understandably, it is difficult to project turnover when income is speculative, however, a cashflow forecast demonstrates that you understand and have identified all costs. The costs analysis should in turn highlight what levels of turnover will be required to make this a successful venture.
You can find additional support relating to cash flow forecasts here.
Do not forget to keep revising both documents; as your plans take shape, these are valuable tools for both you and your finance partner.
We are experts in your industry.
Performance Finance are experts in optical funding, in our 15+ year history we have funded 100’s of new start practices, we offer an exceptional range of low-rate facilities that not only meet your new business needs but also maximise those all-important tax allowances.