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Credit crunch opens new finance opportunities

The toughening of banks’ criteria for lending is providing an opportunity for independent finance companies to work with motor retailers.

Dealers are facing increased costs and reduced availability of traditional funding lines, said Jeremy Hartill, head of Capitas Automotive Practice and managing director of Capitas Finance.

Consequently, independent finance companies are being consulted for services previously dominated by banks.

“We’re receiving interest in a number of areas, ranging from retail groups who are looking to invest in fixtures and fittings to meet corporate identity guidelines, to requirements for unit stocking plans,” he said.

Capitas now works with a large number of AM100 groups, he added.

Many dealers are finding commercial property fin-ance a contentious issue, as most banks are reducing loan to values, linking advances to LIBOR (the rate at which banks borrow from each other on the London interbank market), increasing rates and fees.

Hartill said it would be interesting to see the long-term effect of a credit crunch and how alternative finance providers can step in for the banks.

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