Luna Finance – a new entrepreneurial broker on the block

Charlotte Obahiagbon, Luna Finance’s business director told Asset Finance International that the company initially specialised in providing funding to small businesses in the  telephony systems and IT telecoms sectors but following customer demand quickly expanded its range of offerings.

She explained: “We started with a panel of funders which consisted principally of BNP Paribas Asset Finance and Investec Asset Finance. Later, as we expanded our sector specialisms into commercial vehicles, construction equipment, plant & machinery and materials handling, the funding panel began to include Hitachi Capital and Millwood.”

Luna Finance is predominantly a non-prime broker which provides asset finance to those smaller businesses that do not yet have available five-year’s audited accounts or have recently had “a bumpy time” credit wise.

Replacing rusting assets

Obahiagbon stressed that customers in its client range are typically small businesses showing some entrepreneurial spirit and seeking to replace “rusting” assets – but whose bank facilities are fully committed.

A KPMG trained accountant, Obahiagbon is also managing director of Totemic Lending, part of Totemic Holdings, Luna Finance’s parent and a global financial services company. Totemic is also the originator of PayPlan the debt management company.

Another subsidiary company of Totemic Lending is PremiumPlan a non-prime provider of auto finance which makes car funding available to clients with debt management plans (DMP) or individual voluntary arrangements (IVAS) – or merely newly-formed small businesses that are unable to get funding from their banks.

Luna Finance has recently been granted regulatory status by the UK Financial Conduct Authority which “rubber stamps the business’s ethical and fair approach to practice and offering our clients extra assurance”.

“This official authorisation franks our working methods,” she stressed, “and smooths the way for new clients seeking specialist asset finance.”

Sale & leaseback

One relatively unusual asset finance product that Luna Finance, as a brokerage, makes available for its client base is sale & leaseback. “There is a big market for this at present, “she explained. “During and immediately after the recession small businesses were extremely risk averse and tended to acquire assets with available cash. Now, however, with a more buoyant marketplace there is a growing need to replace worn-out assets and a need to raise funds to do so. Sale & leaseback can be an ideal way to achieve this.”

By way of example, she quotes one corporate client that sought to expand its assets to service a newly-won contract. “There was a shortage of cash available to acquire the new equipment which would cost a significant amount of money. We enabled a sale & leaseback transaction on some existing equipment, owned outright by the company, which enabled it to place a £250,000 deposit on the new assets which it subsequently acquired.”

Obahiagbon stressed the consultative manner in which Luna Finance operates. “We are not so much interested in dashing in quickly to complete one deal,” she said, “but rather to act in an advisory role from the outset. Our aim is to build long-term trusting relationships with small business clients.”

Prepared to go the extra mile to tailor a deal to suit a customer, Luna Finance is able to structure seasonal payments – especially useful for the agricultural sector.

The company currently employs four external and four internal staff but Obahiagbon is seeking to expand its geographical reach by attracting sales staff with some degree of sector specialisation in the UK’s south east regions. “As a company,” she said, “we endeavour to ‘think outside the box’ and be entrepreneurial in our approach to new business. We are therefore looking for sales staff who think in a similar manner.”

She added: “The external team have a wealth of experience of working within the commercial vehicles, plant and manufacturing sectors therefore they understand the sector and can work with our clients to structure a deal that works for both sides.”

In addition the company, which so far has operated on a direct sales basis, is working to establish vendor finance partnerships with large retailers and dealers.

It is all part of Luna Finance’s corporate plane to double those new business balances it has funded from around £15 million this first year of trading to at least double that in year two.