What is Asset Finance?
Asset Financing Explained
Asset Financing is the ideal type of funding which businesses can access to overcome the challenges faced in raising the necessary capital to purchase new assets or refinance existing assets. However, ill-informed, or pre-occupied businesses may mistakenly undertake to obtain such borrowings through the use of a business overdraft from their bank or perhaps a business loan to boost the cash flow of their business.
That said of UK businesses currently use asset finance as their preferred way of accessing finance, as such asset funding companies do offer a more direct and specialised route to funding to assist businesses with the asset growth it’s after.
So what is asset financing?
Whilst finance leases, hire purchase, and operating leases all provide a business with the means to access finance to purchase its new equipment such as Cars, Equipment and Machinery without the need of tying up its working capital. Asset refinances can also release the necessary cash against the value of a business’ existing assets.
Benefits of asset financing are?
- Improves and simplifies cash flow management to budget effectively and control your outgoings.
- Improves financial leverage, enabling capital savings in the business for other expenditure.
- Has tax advantages, operating lease payments and Hire Purchase agreements are favourable to tax deductions.
- Can be used for intangible assets including software.
- Can be used against second-hand equipment.
Which asset financing solution is right for my business?
Although asset financing is only one of the many routes to finance available to businesses, it’s fair to say that contained within the asset funding banner are a variety of options from various companies, therefore its important for a business to explore the benefits of each one before purchasing new assets:
- Hire Purchase Hire purchase finance is a form of asset finance which is accessed through hire purchase agreements which as a result enables businesses to then purchase an asset through a series of payment instalments via an asset lender. This type of finance helps the business in maintaining its cash flow whilst at the same time avoiding the need for them to pay for the asset in full immediately. more
- Finance Lease and Operating Lease Finance Lease is a route to finance which businesses can utilise via commercial hire purchase arrangements. How it operates and the benefits provided are slightly different to other hire purchase agreements. in that: more
- Asset Refinance Asset refinance provides a vital cash injection to help your business overcome any cash flow problems as you sell equipment to an asset finance company, who then leases it back to you in return for regular rental payments.
- Vendor Finance Vendor finance allows your business to purchase an asset from the seller over a specific period. The vendor forwards a percentage of its value which is paid back in regular instalments.
- Import Leasing Import leasing offers a means of financing the purchase of any assets from overseas while the asset finance company also specialises in international business management.
Request a Call Back
If interested in knowing more about funding & how we can help. Please provide a few brief details and we’ll get right back.