Dr James, 1s:

Today we're here to talk about something that is just absolutely financed in the one and it's just no one in the myriad of dentists who invest episodes dentists who invest podcast over the years. Done so many episodes of packet finance, but don't think we don't think we want equipment and the ins and outside. Obviously is not saying, but what there is to say is very important to know from test to do we know that we're getting the best deal, and we know that we're not paying. I'm going today by Mr. Gavin Kirkwood, purple with asset finance. We're gonna be talking the ins and out of equipment finance, what we need to know in order to get to do a good deal, and also in order to avoid getting stumped. As ever, you can claim your CPD for this episode within the official Dentists Who Invest Smart Money Members Club. Smart Money Members Club also includes multiple mini courses and webinar series on finance for dentists, including how to become as tax efficient as possible, as well as understanding investing. All of this content comments as verifiable CPD, and you can download your certificates there and then upon completion of each lesson. In addition to this, we also include a whopping 10% discount on your dental indemnity and a 5% discount on lab bills for dental principals, amongst other perks and discounts for members. Please use the link in the description to claim your verifiable CPD for this episode. So I'm looking forward to this for two reasons. One for us to get to know each other because that's always fun. And two, because we've never actually done an episode in equipment finance in the 500-ish episodes of the Dennis Invest Podcast. So I think it is about time. And I think a lot of dentists, it's a big black hole in their knowledge, and it means that they're not often getting the best deal. And that doesn't just apply to their principles, that applies to the associates as well, who want to buy scanners and do really cool things like that. Because obviously, if we can get a scanner on finance, we can start making money from it straight away and then pay back the debt as time goes on. And that can really make sense for a lot of dentists. But the problem with that is we just don't know where we're starting. So I think one of the most important things, or a really good question I could answer, or sorry, a really good question I could ask a beggar pardon, just to kick things off, Gavin, would be when a dentist comes to you and they want finance for a scanner, let's say, or let's say some sort of a piece of equipment that's maybe maybe not too expensive. Maybe I don't know if that makes any difference or not, but let's just say a scanner for the moment, because associates and principles will both buy scanners. What would be the first things that you'd like to know from that dentist?

Gavin, 2m 42s:

So, first thing you would like to know is a little bit more about the business. So, who are they? How long have they been trading? Are they a sole trader? Are they a limited company? So on and so forth. We get that information, we can then determine which funders would look at it. So certain funders will only look at sole traders, for example, certain funders will only look at limited companies, so on and so forth. So um once we understand who the customer is, how long they've been trading, that'll also determine um what kind of rates we can get them access to. Once we've got that information, we can then determine um obviously which funder we're pushing the deal to, and that then determines what information we require for them to get their finance approval in place. So typically most funders want last three months' business bank statements and they want a copy of the last filed account. And that just simply allows them to see um that the business is sustainable, the business is making profit, and there's money going in and out of the account, and it can afford uh they've got the affordability for that asset. Um to run a quote, it takes literally 30 seconds, James. So if uh a dentist comes to us or an associate comes to us and says, Can you run this quote on this specific piece of equipment? Can you give us a two-year, three-year, four-year, five-year option? We can do that pretty quickly. Um, and then if they decide that that's the route they want to go down and they're happy with that quote, we just gather that necessary uh information, submit it across to the funder, we could hopefully have an approval back in some cases the same day, and we could have the deal done in this and paid out the following day. So it's a fairly easy, fairly simple process, as long as we can get the right information up front.

Dr James, 4m 22s:

And tell me this because you said that you had to have a previous record of a filed accounts, as in obviously what they send to HMRC, does that mean that they have to at least have been trading for a year to get a quote?

Gavin, 4m 36s:

No, certainly not. Um so it depends on the individual client. So if that customer's only been trading for three, four months, all we would need is bank statements, but that would then determine which funders we can go to. So if they've been the longer they're trading, the better access they'll have to funding because they'll they will open up the tier one funders. Uh tier fund tier one funders, should I say, they prefer to have at least one year's books, uh, ideally two years if possible. The longer the the trading history, the stronger the credit appetite, I would say. Um however, that doesn't rule out anybody that's a new start or only been trading in a couple of months. We can still access finance for those. It just kind of narrows down the panel of funders that we can speak to.

Dr James, 5m 22s:

Great. And you know what? I think what we should get into is the ins and outs of how we can arrange the deals or set the deals up so that we can obviously understand how to get a really good deal for the dentist. But I think the very first thing to ask is why should a dentist go to a broker versus doing it themselves? Is it gonna cost them more? No, certainly not.

Gavin, 5m 43s:

It's quite the opposite, it should save the money. So um, most um so we say dentists or any industry, if they're going to buy an asset directly, um, chances are they're gonna go to one, maybe two finance companies that they've maybe seen online or they've heard through the great line someone else has had a deal through them. Um they'll just go direct, they'll get a deal, so on and so forth. Uh that deal might be great, that deal might be terrible, but they're not going to know because they're only going to one, maybe two places. Utilising a broker, we have a panel of nearly 100 different finance companies on our books, and that ranges from the top-tier mainstream banks, your your Lloyds, your HSBCs, all the way down to the bespoke niche finance companies who only deal in certain industries. And because of that, we can go out and we can actually source and tailor a bespoke deal to you. So you might go into your local bank, for example, and they might say, right, the rate's going to be 9%, 10%, 7%, whatever it might be. Whereas we can go and play each other off against each other essentially and say, right, well, this piece of equipment to get this deal done, we need it to be 7%. So who's going to play in that market? Right, okay, that funder and that funder, right? Okay, here's the details of this customer. Can we get to this way? And then we can go back to the customer knowing that we've got the best deal on the table on that day for them to get that deal approved.

Dr James, 7m 6s:

Boom. Because I guess that's the limiting belief for a lot of dentists that are out there. They think that that's why it's better for them to do it themselves. But am I right in saying it's actually against the law for it to be more if you go through a broker a broker? Have I got that right? UK dentists, Dentists Who Invest now has an official platform where you can learn about finance and obtain UK compliant, verifiable CVD at the same time. The only platform that exists on which you can do both. The Smart Money Members Club has hundreds of hours of mini courses, webinar series, and live day recordings on all things finance slash tax efficiency for UK dentists. This includes complete courses on how tax works for UK dentists, finance so that you can invest and grow your own money, business so you can improve your profitability as an associate or principal, and for those out there that want it, there's also a mini course and how you can responsibly enter the crypto space using measured amounts of capital. I've gathered this content from the best of the best I could find in each respective area so that you know that this is how people at the forefront of each field advise their clients. The Smart Money Members Club also contains discounts on common things that UK dentists need to pay for on a regular basis. This includes a whopping 10% discount on dental indemnity, the offer to beat your income protection deal no matter what you're paying, and for the principals out there, 5% discount on lab bills and 10% discount on practice insurance. These are designed to offer hundreds, if not thousands, in annual savings. The purpose of this members club is to not only boost your monthly income but also manage your outgoings as much as possible and therefore create more profit. To celebrate the launch of the Smart Money Members Club, and given that the CPD deadline is coming up soon, I've decided to offer the first month of this platform entirely for free. This offer will end in the coming weeks as soon as the current CPD cycle is up. To collect your CPD for this podcast episode using the Smart Money Members Club, feel free to use the link in the description of this podcast.

Gavin, 9m 19s:

So we actually disclose to you how much money we make on each deal. So if you're going direct, for example, and the rate is nine percent, and then you come to us and our rate is nine percent, we might be getting the deal better off, but we're making a commission. That doesn't make any sense. Well, I suppose it does make a sense because we're going to do all the work for you. But ideally, what I would do if the customer came to me and said, Gavin, uh, we're getting a deal currently for an existing lender at 9%, I would make sure I go away. I've speak to all the various different funders that we work with that would work with that asset and that client, get the best possible quote on the table so that we're coming in better than what I've got existing. So um, but I from my understanding, though, it's not illegal for us to come in more, but we have to disclose what the rate is and what you're you're gonna be paying for that.

Dr James, 10m 6s:

Sure. Okay. So it really, in other words, it should say the dentist money, in essence, is is is is the idea.

Gavin, 10m 12s:

Yeah, if you if you utilise it properly, um now I'm not saying that brokers are to be all and end all either. There is occasions when you can go direct and the deal is going to be better. But what that does is it'll guarantee that you're getting the best deal. If you come and speak to a broker like myself, I'm going to go out, I'm going to do all the legwork for you, I'm going to speak to all the various different funders, and I'm going to come back and tell you that is the best rates on the market currently for that piece of equipment over that term. Um and if what you've got's better, then you know you're getting a great deal. However, I would say easily eight, nine to ten times out of ten, we uh we tend to do better than what's on the table directly.

Dr James, 10m 52s:

Cool. Alright, then moving on, just to what that deal can or should look like. How do dentists get themselves the best deal possible whenever it comes to their asset finance? So, for example, should we also choose to spread it over the longest term possible? Uh what is a good interest rate, what's a bad one? Tell me more. How does that look for you guys? How does that look for you guys?

Gavin, 11m 17s:

Ultimately, it's always different for each client, James. So some clients have got different goals. So some clients want to spread the cost as low as possible over a longer period so that their outgoings and their cash flow is stronger, but um ultimately putting that asset to work immediately and paying it off over time. Whereas other um clients have this um kind of process in their head where they just want to buy it, get it paid off as quickly as possible. So sometimes they want to do it over a shorter period, they don't want to do anything extended because they don't want to have that commitment for three, four, five years, they want to do it over two years and have it paid off. So we'll we'll run through that whole fact find with a customer uh initially to find out what their requirements are, and then we will then give the necessary advice to say, right, well, on this asset, we would recommend this. If you want to go that way, that's your option, we would recommend that way. Or we would say, yeah, your way is correct, or listen, we would really recommend you go this way. Um this is this would be the better option for you. Um but ultimately we'll always do what the client requires uh and requests. In terms of rates, again, it's it varies client to client because it depends on how long they've been trading, um, if they, as I say, if they're a sole trader or a limited company, and also what that company's credit profile is like. So if they are absolutely rock solid, been trading for a few years, really good, strong trading in terms of profitability, um, chances are we're gonna get them the best rates tier one on the market, you're not gonna get any cheaper anywhere else. However, if they've got um maybe a few mispayments from maybe a tougher time six months ago, that can cause the tier ones to maybe get a little bit uncomfortable, so they maybe need to drop down to a tier two funder. So therefore rates um are a little bit more expensive. Um, but again, that's the benefit of using a broker. We'll go through all of that for you and we'll get you the best deal possible for you as a client.

Dr James, 13m 15s:

Would you say that there's any other factors that we need to be aware of apart from the length of term and the rates?

Gavin, 13m 22s:

Um typically the the asset. Um so some funders will like so we have three tiers of assets, okay? So we have hard asset, medium asset, and soft asset. Hard asset typically tends to be things like uh cars, vans, trucks, um, or anything oily or anything wheely, as some funders like to put it. So if it's got wheels and it can be recovered, or it's a piece of equipment like plant or machinery, it can be recovered, that'll be classed as a hard asset. Funders tend to like those better because it's something that's tangible. Um medium assets fall somewhere in between soft assets and hard assets, obviously. Soft assets are things more like software or um maybe something that can be installed but isn't as easily recoverable for a funder. Um so rates vary dependent on the strength of the asset as well. So um once we understand from the client what they're looking to finance, whether it be a chair, whether it be x-rays, whether it be scanners, whether it be whatever it might be, um we can then determine whether that sits within the funders kind of tiering, and that then determines what kind of rates they'll they'll qualify for as well.

Dr James, 14m 36s:

We've all heard of deposits when it comes to practice finance. Does that exist with equipment finance as well?

Gavin, 14m 43s:

Yeah, so it again it varies. Depends on what kind of uh acquisition method we go for. So typically, if you go for a HP, most funders tend to want the the VAT side up front as a deposit. But if we look at some kind of lease, then we can we can again depend it on the client's profile, look at potentially zero deposit up front. Um so again, it just it's it's one of those ones. There's both options on the table, James. You can pay a deposit um or you you might not have to pay a deposit. It all depends on again the strength of the clock uh the customer.

Dr James, 15m 16s:

So that that that does happen. And is it typically an option where you can put down a deposit and then reduce the overall repayments? Of course, yeah.

Gavin, 15m 25s:

So even if there's no requirement for a deposit, if the customer still wants to put in 5, 10, 15%, whatever it might be, even more, but they're they're more than welcome to do so.

Dr James, 15m 35s:

Any small print that we should be aware of, I know that you're a broker, so you don't necessarily represent the finance companies per se, like you're not from the finance company. Any Ts and C's or areas that people get caught out over or dentists get caught out over?

Gavin, 15m 51s:

No, I wouldn't say so. I mean, both of the products that we'll typically offer on this kind of thing are fairly standard, fairly generic. It's it's used hundreds of thousands of times daily across the UK, I would imagine. Um, and that's typically like HP and lease. So there's nothing uh majorly scary about them. Um we would run through everything with the client so they're fully aware of the agreement before they sign it. Um but yeah, it's it's fairly standard. There's nothing in there that's too scary, nothing that they should be too worried about.

Dr James, 16m 21s:

Cool. All right, well, reassuring to hear. And it sounds like the world of equipment finance isn't actually too far removed from the world of practice finance as well. So I guess isn't isn't too surprising. Obviously, the sums of money um are a lot less, and I'm gonna say the repayments are obviously gonna be less too. Um overall, of course, the amount of money that we're repaying of is gonna be less because the principal's less, of course, is in the amount that we're borrowing. Tell me this. How do they compare whenever it comes to, and I know obviously it's gonna vary completely on the deal. Uh, how do interest rates compare um in maybe practice finance where we're seeing like, I don't know, one and a half, two over base? How would that compare to equipment finance, or is it so broad that you can't really say specifically?

Gavin, 17m 6s:

Again, it's it's client-dependent, but yeah, I wouldn't say we're uh a million miles away from that at the strongest terms. Um if the customer's a bit uh weaker in terms of credit profile, or if the customer's maybe a bit newer in terms of when they established, then it's going to be a little bit higher than that. Uh, in some cases it could be very high in comparison to that. Um it just depends on the profile of the customer. But in terms of the excuse me, in terms of the tier ones, um the the absolutely solid, well-established um practices who've been going for a couple of years and don't have any issues with credit lines, and I wouldn't imagine it'd be a million miles away from that or as close to that as we can get.

Dr James, 17m 46s:

Seems reasonable. And then I'd also just like to know, because I'm I'm curious, what sort of terms are we borrowing this money over? And are they usually is the interest fixed throughout the course of the term, or do we have reviewal periods like practice finance?

Gavin, 18m 2s:

Unfortunately not. So it would be a fixed rate agreement over a again, open to the customer, we could do 24, 36, 48, 60 months. Um, those tend to be typical. Um most funders are flexible in the sense that they will look at bespoke terms. So strange gonna upgrade a customer ability looking to buy a car over 40 months and for his own bespoke reasons. Um, we managed to get that approved. But your typical two, three, four, five-year terms are what most deals tend to be done over.

Dr James, 18m 32s:

Interesting. Well, this has definitely been uh an eye-opening podcast because I didn't really know any of these things for finance, and I might speak on behalf of a lot of the members of the audience as well. Gavin, thank you so much for your time. If anybody wants to reach out to you based on anything you said today, how are the best off finding you?

Gavin, 18m 47s:

Yeah, of course. So you'll find us on www.crickwoodassetfinance.co.uk. All the the relevant information's on there. You'll find us on LinkedIn, Facebook, Instagram, all the usual socials as well. Um if you just look out for Kirkwood Asset Finance or Gavin Kirkwood, you'll you'll see all the information.