Asset Finance
Business financing simplified

Funding Assets

Business financing simplified

What Is Asset Financing?

Asset finance is the collective term for asset-based lending. It is a flexible approach to funding that allows you to leverage assets you own or create payment structures to access assets you would like to own or lease. 

Over the past few years, it has become the fastest growing finance option for businesses of all sizes. With this model of finance, your business can access a range of high spec equipment or machinery without having to buy them upfront and impact your working capital or cash flow. 

An asset can include anything that is vital to the operation of your business, ranging from large milling machinery, tractors, road vehicles, printers all the way to fitting out your retail stores including (walls, partitioning, paint, tiles etc, heating, etc…). But if your business cannot afford the asset, the asset finance provider will, in short, buy it for you, and you then pay them back in instalments or rent it off them.

Whilst the range of asset products vary to suit the payment structures of different businesses, they are all designed to ensure your business can grow without compromising your cash flow.

Some of our lenders

Hire Purchase

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Asset Refinance

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Leasing

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Sales and Leaseback

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Types of Asset Finance

Hire Purchase

Hire purchase is the branch of asset finance that lets you purchase the asset but by spreading the cost over time, rather than in one large sum. You pay back for the asset in installments over an agreed term.

Asset Refinance

Another style of asset finance is asset refinance. This involves leveraging the assets you already own to release cash. It is a great way of using the equity contained in high value business assets that are logged on your balance sheet.

Sales and Leaseback

Asset leasing gives businesses the option of borrowing an asset for a fixed period, rather than having to buy it outright. Not only does this overcome the cash flow implications of paying for a new piece of equipment or machinery up front, but it also means the issue of asset depreciation is avoided.

Leasing

A sale and leaseback is an arrangement in which the company that sells an asset can lease back that same asset from the purchaser. It is a simple financial transaction which allows a person to lease an asset back to themselves after selling it.

How Does It Work?

Here is an example:

Asset finance involves the way you pay for the physical assets of your business. This can include using existing assets as security to borrow money (asset refinance) or taking out a loan against what you already own to gain access to a new asset (leasing), or you can spread the cost of an asset over time (hire purchase). 

For example, if you own a farm and you want to expand your ownership of equipment you may consider hire purchase. A combine harvester can cost upwards of £300,000. If you don’t want to make an upfront payment, you can spread the cost over time.
You will make an agreement with the lender over how long they will lease you the combine harvester, and you will pay back monthly with interest, and then at the end of the contract you will have the option to purchase the combine harvester outright.

 

 

Asset Finance

The Benefits

Simply, this is a way of increasing your cash flow. For a small cost, you are no longer at the mercy of lengthy payment terms, you can release the cash tied up in their invoices on delivery of goods or services.

Ease of access

Many businesses report that it is much easier to obtain asset finance than to get a business loan

BENEFITS

Efficient use of assets

With asset finance, your business can use machinery or equipment without having to commit to purchasing it upfront, with all of the expense this would involve

BENEFITS

No credit checking

There won’t usually be a credit check carried out by the provider when you apply for asset finance

BENEFITS

Choose your own repayment structure

You choose a repayment term that will ensure the required repayments are affordable. The repayment term might, for example, be anything between one and five years.

BENEFITS

Improved cash flow

Because you make affordable repayments of a pre-determined amount, managing your cash flow will be much easier

BENEFITS

Tax benefits

With some asset finance arrangements, you are considered to be the legal owner of the asset throughout the repayment term, even if you’re not planning to formally purchase it at the end. This means you can claim certain capital allowances and reduce your corporation tax bill

BENEFITS

Qualifing questions

Can I Borrow?

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