cheap money and expensive money
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24 April 2008
| TYPE OF ASSET | CHEAP OR EXPENSIVE MONEY – WHAT % OF VALUE WILL THEY FINANCE | GUIDELINE / BUDGET PRICING |
|---|---|---|
| Rental fleet – items with serial numbers | Cheap money – up to 80% of forced sale value | 1.5% to 8% over cost of funds |
| Rental fleet | Expensive money only | |
| – items not easily identifiable | ||
| – i.e. scaffolding, hand tools | ||
| Consumables | Expensive money only | |
| Debtor book | Cheap money – up to 85% of debts including vat (excluding past – due) (via factoring or invoice discounting) | 1.5% to 3.5% over cost of funds |
| Real estate | Cheap money – up to 80% of appraised value | 1.5% to 3.5% over cost of funds |
| Transport vehicles/cars | Cheap money – up to 80% of wholesale/auction value | 1.5% to 8% over cost of funds |
| Office equipment/software | Cheap money – only if it’s new or nearly new | 2% to 6% over cost of funds |
| Brand name and trademarks | Expensive money only | |
| Know how and working practices | ||
| Phone numbers | ||
| Ongoing rental agreements | ||
| Forward order book | ||
| Goodwill and/or cash generation capability | ||
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