15th July 2021

Starting Up Your Own Business? What To Consider Before Leasing Your First Device

Starting Up Your Own Business? What To Consider Before Leasing Your First Device

Already a Lease Loop customer? Read this: We know you’re not starting out on your own, but perhaps you know someone who has just begun their entrepreneurial journey. We love helping the ambitious fulfil their potential, and if you know of someone who would benefit from our service then please feel free to email sales@leaseloop.co with your referral. We just need their name, telephone number and email address. 

If it leads to a completed order, we’d like to reward you. We don’t have a prescriptive list, but instead prefer to buy or help contribute to what you want. Past recipients have received anything from waffle makers to golf bags and Apple vouchers. 

Over the last year or so, startups have popped up more than ever before. In fact, stats reveal that in the first quarter of 2021, the number of businesses set up rose by 19% compared to the same period in 2020.

Furlough, redundancies, working from home, and the general impact of the pandemic have completely altered people’s lives. Many decided they no longer wanted to work for someone else. Adopting a ‘what have I got to lose?’ mindset, they acted on their dream and started their own enterprise.

If you’re beginning a new venture, it’s only natural to want the best device – yet that’s a hefty upfront cost. Of course, expenses can be spread out through leasing, but if it’s not something you’ve done before, it can be tough to understand. That’s why we wanted to provide a few pointers by talking through the different models and what you should consider.

Model 1: New start director/sole trader and homeowner

Being a homeowner is really valuable across all of the models we’ll highlight. If you own property and opt to set up a limited company, then you’ll be able to provide a director’s guarantee. This gives the funder confidence that they’ll get the money back quicker, and also reduces the risk of lending.

Whilst the lease is still in the limited company name, you as director will sign a document that commits you to a repayment plan with the funder, should the company go bust. The fact that you’re a homeowner gives the funders confidence that you’ll make the repayments. If you’re a sole trader, however, you won’t need the guarantee, as you’re effectively signing it as an individual.

That being said, you’ll still need a good credit history. If it’s good, with no county court judgments or defaults on payments, you’re likely to be approved by lenders. Even in a situation where you’ve missed the odd installment, as long as it’s been sorted and you can show you have reasonable experience, your application should be accepted.

Model 2: New start backed by external finance

With this model, applicants tend to be backed by venture capitalists who’ve made an investment of at least £250k. Generally, we’ve found these startups are in the tech and creative sector. Given the level of investment, this reduces the importance of the homeownership in the model.

Having said that, the business owner’s personal credit history and experience is still very important. You’ll need to show funders that your venture is viable. Two great ways to demonstrate this are having a visible website and business bank account, which can also help to validate your feasibility if you opt for the first model as a homeowner.

A director’s guarantee will still be required. 

Model 3: New business tenant

Renting instead of owning property isn’t a definite no, but if you have a bad credit history or existing personal debt, then you probably won’t be successful. Even if you have another director in the business with perfect credit, it will be a struggle to get approval for your order. 

If you’re operating as self-employed (even if you own a limited company) and there isn’t another director, you’ll be required to have an excellent credit score. Funders will also look at who you are, your background, and your track record in your chosen field. 

In the situation you’ve already been trading for a couple of months and can provide business bank statements showing a positive position, then this will really help. 

Support with leasing

Overall, as a new business, you’ll need to provide a director’s guarantee and there’ll be a personal credit search. That’s why at Lease Loop, we only recommend pursuing if you’re a homeowner with a reasonable credit history, or a tenant with a brilliant score.

You should also consider that if your order is approved, the funders may want to offer you a different profile. All of our web prices are based on a 1 + 35 monthly profile. To reduce the risk, funders may offer a 1 + 23 monthly, or a 3 + 21 monthly profile. 

Essentially, this means the lease will be over two years, and while the downside is that you pay more on a monthly basis, the upside is that you pay back less overall. You’ll still receive the full three years’ worth of warranty, and the director’s guarantee liability is reduced from three to two years.

Whatever your situation, we’ll be there alongside you. We were once a startup ourselves and at the beginning we faced the same issues, especially around maintaining a positive cash flow. That’s why for us, it’s not just about providing the equipment, it’s about helping you achieve your growth objectives and meet your device needs, every step of the way. 

With our experience, we can provide you with the right advice and build a fantastic relationship from the off. We’ve supported one or two-man bands that have gone on to become multi-million pound companies, and we’d love to be part of your journey too.

If you’d like our support when it comes to leasing Macs, let’s talk. Our friendly team is happy to discuss your requirements and find the right solution, so you can take your business to the next level.