Close Brothers Asset Finance Germany GmbH has been offering asset finance products designed for small and medium-sized print companies since July 2017.
"Many small and medium-sized printers and start-ups within the graphics industry experience difficulties in accessing the funding they require," says David Bunker, who has been with the Close Brothers Group for 24 years.
He is one of the founders of BAFIN-licensed Close Brothers Asset Finance GmbH headquartered in Frankfurt/Main, where Managing Directors Michael Vander and Bruno Oestreicher have been busy building up the new company since July 2017. "After three years of extensive research into the German market," as Bunker points out.
Small businesses caught in the credit squeeze
Their research showed that the economic structure in Germany offered challenges and opportunities similar to those in the home markets of Great Britain and Ireland, where Close Brothers Asset Finance has been operating for over 30 years and today has a loan book of over £2bn.
Although industry association bvdm recently declared that there was a positive funding climate in the printing industry, they also pointed out that this was mainly true for large companies. According to Bunker, new, innovative or very small companies in Germany are finding it increasingly difficult to receive the support of their main bank. As a consequence, it is quite common that necessary investments are not made and that growth opportunities remain unexploited.
"We understand the market," says Bunker. The company has set up expert teams, for example for the graphics industry. In contrast to traditional business banks, these focus on specific industries and – if required – they can also offer a new perspective on processes, company structures or plant requirements. "Unlike leasing companies, we are not associated with any particular dealer or manufacturer," Bunker explains. "Our consultants have a genuine passion for printing, especially digital printing. It’s our goal to help our partners achieve sustainable, healthy growth."
Funding products for SMEs
Typically, Close Brothers Asset Finance projects range from 20,000 to 1,5 million Euros, with 'Sale & Hire Purchase Back' being the most popular form of financing.
Companies sell fixed assets such as machinery at current market value and lease them back for a fixed amount. This way, dormant reserves can be used to give companies more financial leeway, for example to help them through periods of seasonal sales fluctuations, or as down payments for new machinery. This can still work even if the asset itself is still partially financed in other ways, if CBAF pays off all other obligations or negotiates an extension of the term. Companies refinancing in this way can continue production as before whilst receiving liquid funds.
Close Brothers Asset Finance also offers hire purchase, a form of financing that can be particularly suitable for start-ups - investments can be paid off over a longer period, after which the asset becomes the property of the founder. ‘We use different criteria from traditional banks to decide whether or not we should award funding,’ Bunker stresses. ‘We prioritise the asset value and idea itself and the team’s enthusiasm. We strive for a long-term relationship that is mutually beneficial.’
Risk and Opportunity
Like all financing tools, there are certain risks associated with asset financing, such as dramatic changes in the market or unresolved or failed succession planning. But there are plenty of opportunities too, particularly for digital printers who need funding for innovative concepts quickly and without much paperwork.
"If need be, our advisors can make a decision within a few days. The customers need to show their plan can afford repayments and this need not be a 30 page business plan!"