Is Asset Finance the best type of finance for your business?

Posted: 02 / 02 / 2017

We gave our Funding team control of our news feed, where they’ll be talking all about the different types of funding solutions that are available to you and your business.

This week, the team focused on Asset Finance, and whether or not it is the best type of finance for your business.

If your business has fixed assets, plant and machinery or vehicles, you could benefit from using asset finance to release working capital or help purchase new equipment.

So, what exactly is Asset finance?

Asset finance is a type of finance used by businesses to obtain the equipment they need in order to grow, which usually involves paying a regular monthly payment to the asset financier over an agreed period of time – avoiding the cost of paying for the asset outright.

This type of finance can be used to fund any asset, from telephones and photocopiers to forklift trucks and even computer equipment/software. This type of funding is one of the most popular funding solutions available.

How does it work?

The finance company will take a fixed charge over a specific asset and provide funding for that asset (either a new purchase or an existing asset in the balance sheet). The amount of funding will depend on the asset in question and it’s residual value

What are the benefits?

The various forms of asset finance provide a number of advantages:

• It improves cashflow as you can pay for the asset over a period of time as opposed to up-front
• It allows businesses to grow quicker that they would be able to organically
• It could provide a well needed cash injection if you re-finance an existing business asset
• Finance agreements can often be tailored to the business’ needs, with flexibility on both the term and repayment schedule
• Asset finance providers often specialise in a particular type of asset about which they have expert knowledge of

So, if your business needs new equipment that might otherwise be unaffordable, Asset finance could be the perfect solution for you.