Asset Finance

 

Asset finance allows a business to purchase assets for the business. These assets could be new or old and you can even refinance against existing assets your business already owns.

    What is asset finance?

    Asset finance allows a business to purchase assets for the business. These assets could be new or old and you can even refinance against existing assets your business already owns. This form of finance is great for businesses that are looking to expand, but need to purchase new equipment. For a business, asset finance is a great weapon to have in your armoury.

    How does asset finance work?

    Asset finance is very straightforward. Firstly, you speak to a member of staff at Contact Business Finance and explain what you are looking to achieve. This could involve purchasing a new machine, vehicle or any type of asset to improve the efficiency of your business. Once we understand your plans and get more of an understanding of the asset itself, we will speak to asset finance providers about your requirements and put your business in contact with the most suitable lender.

    Frequently asked questions

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    How much does asset finance cost?

    Asset finance costs depend on many different variables. This is why it is important to liaise with a broker from day one as it can save your business a lot of time and money. Rates can vary but we typically see clients pay anything from 2-9% in interest. Asset finance costs depend on many factors, some of which are listed below:

    • The value of the asset
    • How likely it is to decrease in value overtime
    • The level of deposit
    • The asset profile itself 
    • Your business and credit worthiness
    • How many miles or hours that are on the clock if purchasing something that is used

    What are the advantages of asset finance?

    New equipment – asset finance is designed for this purpose and allows your business to purchase new or old assets so you can not only trade efficiently, but grow your business.

    Cashflow – your business might need a quick cash injection. If you own assets within your company, you can refinance against existing assets you already own.

    Better rates – asset finance is generally more competitive than a business loan. Why loan money if you already have assets within your company you can release cash from. 

    Flexibility – a lender can often be more flexible with asset finance compared to a traditional loan as they often have the asset as security.

    Compete – your business might need to purchase the latest equipment to offer the best product or service. Asset finance gives you the option to stay ahead of the game.

    Tailored – there are different types of asset finance. Your business can lease only, own the asset at the end of the agreement, or simply trade it in.

    Hard or soft assets – generally, lenders prefer hard assets such as vehicles, plant & machinery. This is because they are less likely to break and depreciate in value. Some lenders can also lend against soft assets. A good example of a soft asset includes computers and IT equipment.

    What are the disadvantages of asset finance?

    Location – if you are looking to buy an asset from overseas, most lenders only like to lend money against an asset that is located in the UK.

    Early Repayment Charges – some lenders charge for you to settle the facility before the end of the agreement. It is important for a broker to explain the term/length of the asset finance agreement.

    Supplier history – if your supplier isn’t reputable and has little history, this can impact the confidence the lender has in the asset your business is looking to acquire.

    Can asset finance help me purchase a new asset?

    Asset finance can be used to purchase brand-new or old assets. Rather than purchasing an asset outright, many businesses put down a deposit on the asset and use a finance company for repayments. There are many options for the business to either own the asset outright at the end of the agreement or potentially buy new again – just like what people do with cars.

    Can I refinance existing assets owned buy my business?

    Asset finance can be used to release working capital into your business by refinancing assets that your business already owns. Not all asset finance lenders can offer this. However, partnering with the correct lender can be great for your business if you need to release more cash by releasing equity for assets you already own.

    What assets can my business receive funding against?

    The majority of lenders prefer hard, tangible assets that you can physically touch such as plant, machinery, vehicles etc. Assets that would be popular for other businesses to potential acquire are always favoured. All lenders work on the basis that if your business was to fail, they would be able to sell the asset and not lose out on any money. However, if an asset is very niche and one on its own, this does not mean an asset finance lender would not lend against such asset.

    Can asset finance help me purchase an old asset?

    If you know of a business that is looking to sell an old piece of kit, vehicle or any other asset used for business purposes. You can also use asset finance to help purchase used assets. For example, a transport company looking to purchase another vehicle for their fleet from another business. Or an engineering company looking to diversify and manufacture a new part, might want to buy a machine from another engineering business. Asset finance is a great weapon to have in your armoury as it gives you buying power so you can acquire more assets, grow the business and trade efficiently.

    How quick can I arrange asset finance?

    Speaking to a specialist broker can obviously speed the process up as you will not waste time speaking to lenders that may not meet your needs. Once you establish a relationship with an asset finance lender, asset finance can be arranged in as little as 24 hours. If you do not already have a relationship with a lender and you can provide all the information upfront, asset finance can still be arranged in a matter of days.