Business owners will understand the dilemma of having an asset-rich company but being unable to expand or grow due to the inability to get the finance they need. When cash flow is good, you can pay your bills and invest in your business. But, when cash flow is poor, it can become impossible to grow – regardless of how successful the business looks on paper. This is where asset finance can step in to fill the gap and allow you to carry on with your expansion plans and buy the equipment or technology you need to stay competitive. Furthermore, an asset finance calculator can take away the stress of deciding if this is a good option for your business, by laying out the full cost to your business before you agree to the loan.
What is asset finance?
Asset finance allows a business owner to access the finance needed to expand their business using their existing assets as a type of collateral. In accounting, an asset is anything owned or controlled by a business that has an economic value. Lenders use the value of existing assets as their criteria for deciding how much can be borrowed and will essentially buy the asset for you and you simply pay them back according to the agreed payment structure.
The structure of your asset finance will vary depending on your circumstances, the types of assets you already own and the purpose of your loan. The options available include a hire purchase agreement with a fixed interest rate but you will own the asset at the end, asset leasing allowing for more flexibility but with no outright ownership at the end or asset refinance where you give up ownership of an asset until you have made the full repayments.
How to use an asset finance calculator
As you can tell, the structure of these loans can be complicated and that’s why an asset finance calculator can give you a much clearer idea of what will work for your business. Not only can you find out how much you can borrow, but you can also try different scenarios to find out the very best option for your future growth.
The information you will need to use the asset finance calculator includes the following:
- The type of asset you wish to purchase
- The cost of that asset
- The finance length in months
Once the calculator has these very basic details it will provide you with a list of possible lenders that could meet your requirements. Each lender will assess your eligibility based on the asset value within your business, your turnover and profit, the business credit history and your personal credit history and the total length or term of the finance. Like most loans you will need to provide security details and proofs of ID as well as VAT returns from your business.
How accurate is the asset finance calculator?
The calculator will give you a representative example of what your loan could look like. The interest rates will be based on the average for people in your circumstances, but this could be subject to change. Many other factors will also have been assumed including your credit history, your business turnover and existing asset value. These details will be added to your calculation when you apply, possibly changing the outcome. However, the calculator is based on the average customer and can give you a great starting point for your decision-making.
Will the calculator tell me everything I need to know?
Asset finance (like most loans) is tailored to the individual needs of your business and a calculator can only give you an estimate of what it could cost your business. As mentioned above you may choose alternative financing options such as leasing, and this will impact on your monthly payments. For that reason, the calculator is the first step on your journey towards getting the right asset finance for you. The lender will work with you to create a bespoke finance package that will meet your exact requirements.
Investing in your business is an essential step on the path towards growth and most businesses understand that investment will require financing of some kind. Understanding how asset finance works and using the calculator to estimate the costs is an easy and informative way to make those investment decisions without any risk to yourself or your business.
Get in touch with us at Funding Bay for your Asset Finance needs.
Check out our Asset Finance Calculator.
