Business asset finance is a popular form of funding that allows businesses to acquire the equipment, machinery, and vehicles they need to operate and grow. In this blog post, we’ll review the market for business asset finance and the available options for businesses looking to finance their assets.
Market Overview
The market for business asset finance is highly competitive, with a range of lenders and providers offering various options to suit the needs of businesses. The market is driven by the demand for new and updated equipment and the need for businesses to keep up with technological advancements and industry standards.
According to the Asset Finance & Leasing Association (AFLA), the asset finance industry in the UK provided over £35 billion in finance to businesses in 2020. The industry is expected to continue to grow, with businesses increasingly looking for flexible and innovative financing options.
Available Options
There are several options available to businesses looking to finance their assets, including:
- Hire Purchase: Hire purchase is a popular option for businesses looking to acquire assets, such as vehicles, machinery, and equipment. With hire purchase, the business makes fixed monthly payments over an agreed term, with the option to purchase the asset at the end of the term.
- Leasing: Leasing is another popular option for businesses, providing them with access to assets without the need for a large upfront payment. With leasing, the business pays a fixed monthly fee for the use of the asset, with the option to return it at the end of the term or purchase it at a reduced price.
- Asset Refinance: Asset refinance is a form of finance that allows businesses to release equity from their existing assets. With asset refinance, the lender will provide the business with a loan secured against the value of their existing assets, allowing them to release cash to fund their operations and growth.
- Sale and Leaseback: Sale and leaseback is a financing option that allows businesses to sell their existing assets to a lender and then lease them back over an agreed term. This provides the business with an injection of cash while allowing them to continue to use the asset for their operations.
Factors to Consider
When choosing a business asset finance option, there are several factors to consider, including:
Interest Rates and Fees
Different lenders and providers will offer different interest rates and fees, so it’s important to shop around and compare options to find the most competitive rates.
Asset Type
Not all lenders will finance all types of assets, so it’s important to choose a lender or provider that specializes in financing the type of asset you need.
Repayment Terms
Different lenders and providers will offer different repayment terms, such as fixed or variable rates, and different lengths of term. It’s important to choose a repayment term that suits the needs of your business.
Creditworthiness
Lenders and providers will assess your creditworthiness when deciding whether to offer you finance and at what rate. It’s important to maintain a good credit score and provide accurate financial information to increase your chances of being approved for finance.
Business asset finance is a valuable tool for businesses looking to acquire the equipment, machinery, and vehicles they need to operate and grow. With a range of options available, including hire purchase, leasing, asset refinance, and sale and leaseback, businesses can choose the option that best suits their needs. When considering business asset finance, it’s important to consider factors such as interest rates and fees, asset type, repayment terms, and creditworthiness to make an informed decision and ensure the best outcome for your business.
Get in touch with us at Funding Bay for your business asset financing needs.
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