Funding Bay Blog

Is asset finance good for business growth?

Many businesses have benefitted considerably from taking out asset finance. Here we look at four different types of asset finance – two of which involve acquiring a new asset, and two which involve making use of an asset you already own. Any one of these finance options can be used to grow your business. 

Hire purchase and asset leasing – using new assets for business growth 

With hire purchase, you initially rent an asset from a finance provider, then become the owner of the asset when all repayments have been made. 

With asset leasing, you rent the asset for a specified period, then you would usually return the asset at the end of the term. 

Either way, it means that you have full and exclusive use of an asset from the very start of your agreement. Businesses that may not have been able to afford to purchase a high-specification asset outright via a single lump sum payment can still get access to the very highest quality business assets, whether this is a piece of machinery or plant, a vehicle, an item of computer equipment, a telephone system, or anything else. 

Once you have started using an asset via a hire purchase or asset leasing arrangement, you can hopefully use that brand new, technologically advanced asset to gain a real competitive advantage, and really grow your business. You certainly don’t want to be held back by having outdated or unreliable equipment. 

Also, because you didn’t shell out a significant sum to purchase the asset at the outset, this should hopefully mean additional cash is available for any expansion initiatives you have been considering. 

Asset re-finance and sale/leaseback – using assets you already own 

Asset re-finance involves borrowing money against the value of one of your existing business assets. Again, this might be a vehicle, machinery, a piece of IT equipment or another piece of office equipment. 

You give up ownership of the asset for a limited period while you repay the amount borrowed, plus interest. However, you still retain exclusive use of the asset and will become the legal owner once again when all repayments have been made.  

With sale and leaseback, you are selling the asset permanently, and you won’t ever own it again. However, this type of arrangement allows you to make lease payments to continue to use the asset in exactly the same way as when you owned it. 

Whether you have sold the asset via sale and leaseback, or simply received a sum lent under an asset re-finance arrangement, you should still have received a significant cash injection. You can then use the funds for any business purpose, such as: 

  • Boosting cash flow and working capital 
  • Purchasing other assets 
  • Stock purchases 
  • Training your staff 
  • Recruiting new staff 
  • Funding a marketing campaign 
  • Developing new products and services 
  • Expanding into new premises 
  • Refurbishments and repairs 

If you want to find out more about how the various types of asset finance could benefit your business, then get in touch with us here at Funding Bay today. 

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When you use our free asset finance calculator, you will find accurate pricing structures that are designed to show you how much loan you can afford

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Further Reading