The UK sole trader sector consists of over 4.1million people, one of the largest and most popular of all the business categories. Often a sole trader is categorised as a tradesperson such as a carpenter, handyman or gardener. However, the sole trader classification actually has a far broader remit and includes consultants, IT specialists, chiropractors, groundwork specialists, delivery people, decorators, tutors and many, many more.
The key characterisation is that to be a sole trader you must be solely responsible for the business that you are running. Activities, goals and priorities can be very different from person to person, but they all have a common goal of wanting to be a successful sole trader. One of the challenges a sole trader can face is funding the acquisition of new equipment. The traditional approach of turning to your local bank for help is often seen as a last resort nowadays, as there are so many other more advantageous funding solutions available.
If a limited company applies for funding, then a lender will evaluate their financial performance through useful sources such as Companies House. However, a sole trader is not required to submit any form of quarterly or annual report, which in turn makes it harder for a lender to learn more about how credible the business is. This is why maintaining accurate accounting records; tax payments and self-assessments are vitally important. It is crucial that any sole trader applying for finance can demonstrate a good credit history and a strong business performance (this is often achieved through the presentation of up to 6 months of business bank statements).
There are different types of asset finance available for sole traders including Hire Purchase, Lease or Contract Hire and each one can be tailored to meet a specific need. Indeed, it is one of the most popular lending solutions thanks to the flexibility that it can offer, allowing the purchase of equipment, machinery and vehicles without affecting cashflow. In addition, the value of the asset being purchased is used to secure the funding which ultimately offers great security to the lender.
Here at NGI, we are regularly asked to help sole traders. In recent months we have secured finance for a refrigerated van for a Fishmonger, a transit van for a home removal service, new equipment for a groundwork professional and a woodchipper for a gardener.
If you are a sole trader and would like to discuss options regarding asset finance, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.