The programme was launched in February this year (see letsrecycle.com story), aiming to help small and medium-sized businesses lease expensive recycling machinery and equipment.
Since recycling is such a new area and often uses technology with little in the way of a track record, many banks have been reluctant to lend money to recyclers for new equipment.
But under the eQuip programme, WRAP provides a “Residual Value Guarantee”, which means that if there is more depreciation in value of the equipment than was expected, WRAP will make up the shortfall. The scheme reduces the risk for financial institutions, giving them confidence to commit money for the new equipment.
WRAP has pulled together a panel of five banks to take part as leasing companies under the scheme, including Abbey National Business, State Securities, Banks of Scotland Corporate Banking, Broadcastle and Mileshield Commercial Funding.
WRAP investment manager Tara Clair explained: “Under eQuip, WRAP has set up a panel of lessors. When WRAP introduces applicants to them, we agree with them a residual value for the asset in question so that they can calculate competitive repayments, safe in the knowledge that, if the worst happens and the machinery depreciates more than expected, we’ll make good any shortfall.”
Initially, the scheme was available to recycling companies operating in the glass, plastics and organics sectors, but has now been expended to include those in paper, wood and aggregates. The scheme is also open to firms that manufacture products using recycled glass, plastic, wood, paper, aggregates or organic materials. In order to qualify for the programme, businesses have to show strong market demand for their product or service.
Since its launch in February, the scheme has already attracted applications for recycling machinery worth 6 million.
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