Asset Refinance

Another style of asset finance is asset refinance. It allows you to utlilise assets that you own, in order to release equity. If you are a business with high value assets logged on your balance sheet, then asset refinance may be for you.

In order to assess the value of an asset and therefore how much cash can be released, a lender will come and inspect and value your asset. The process then involves temporarily transferring ownership of the asset to the lender; however, you will still be able to use the asset for your business without interruption.

Cashflow

It is kind to your cash flow. Because you pay a set amount each month, you do not need to fork out a large sum of money.

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Ownership

After the last instalment you have the option to own the equipment.

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Asset Refinance FAQS

Who is eligible?

Because asset refinance is equity based, you use the asset as security, and therefore, eligibility depends on owning an asset. 

You must be able to present detailed information about the asset that is being refinanced as most lenders will require proof of ownership, current usage, and any relevant particulars, such as the year of manufacture, make and model in the case of equipment and vehicles.

What are the drawbacks?

There can be drawbacks. By refinancing your asset, you no longer technically own it until you reach the end of the term, and you will have to make monthly payments to continue using the item. 

How Much Does It Cost?

The lender is likely to give you a better rate for hard assets as opposed to soft assets. It can also depend on the asset’s condition, age, and whether it is owned wholly or partially by your business. The interest rate on the facility can range between 2% to 7%. In terms of time frames, this all depends on the financier, but it can range between one and seven years. The main benefit of asset refinance is the fact that it is freeing up cash based on assets that you already own, and in that sense, it is an efficient method of creating working capital.

The Benefits

Business loans may be taken out for several reasons such as the need to maintain business operations, invest in equipment, or other manners to advocate growth. They are both beneficial for businesses and usually easy to obtain due to the multitude of lenders. 

Access to lump sums

The funds you obtain from re-financing the asset could be used to fund growth and expansion of your business, e.g. taking on new staff, launching new products and services, expanding into new markets, opening new sites, refurbishment.

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Asset flexibility

If the asset appears on your balance sheet, you should be able to re-finance it. Asset re-finance can be used for equipment, machinery and vehicles and a number of other items. It’s possible to include more than one business asset in a re-financing arrangement.

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Choose a financing amount that suits you

Providers might offer re-financing arrangements for anything from a few thousand to several million pounds. In some circumstances, providers might offer more than 100% of the asset’s value

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Fixed repayments

An asset refinance arrangement has a fixed interest rate, giving you the security of knowing exactly what you will need to repay, making your cash flow much easier to manage Low interest rates – asset re-finance is generally much cheaper than any working capital facility that might be available

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Speed of processing

Sometimes asset re-finance can be provided within 24 hours, and in many other cases the process can be completed within a few days. There won’t usually be a credit check carried out by the provider when you apply for asset refinance.

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Qualifing questions

Can I Borrow?