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What is asset finance?
Asset finance allows your business to purchase the equipment it needs and pay for it over a time period to suit you rather than paying up front. This financing method makes the initial investment more affordable which will have a smaller impact on your cash flow and it will provide you with the opportunity to develop and grow.
There are many different types of asset finance and two of the most widely used are hire purchase and various types of leasing. All of these options let you spread the cost of your investment by breaking it down into manageable monthly payments. The exact terms of your agreement are largely dependent on which financing option you choose and how much you are looking to borrow.
We know that whatever your business, in order to grow and succeed, you are likely to need to invest in assets along the way. Whether it is the purchase of machinery, a vehicle for your business or new computer systems/software, it all comes with a significant cost which can hamper cash flow and perhaps your ability to fulfil orders, if cash is not immediately available when required.
How will asset finance work for my business?
Asset finance is a great way of purchasing capital assets for your business. The assets themselves form the security for the lender. It is quick to arrange and enables your business to acquire assets with the cost spread over the anticipated lifespan of the items. It is easy to budget for the regular repayments and to protect your cash flow.
Once an agreement has been reached and the purchase has been made, you will start to make monthly payments to your lender until you have paid off the full cost of the asset plus interest and any fees. Your lender takes the asset as security whilst the finance agreement is in place.
Asset finance is suitable for businesses who find themselves in the position of needing new equipment to grow, start out or replace their existing assets. With a range of asset finance solutions available, get in touch with us to discuss the best option for you based on your business’ needs.
Why should I consider asset finance for my business?
Asset finance is likely to work for your business for many reasons and we will work hard to find you a lender who will be able to offer your business:
- Security – You will be able to negotiate fixed payments with your lender which can help you plan your business budgets to manage liabilities and grow as required. Your lender will also take the asset as security so there will generally be no charge over your home providing you with peace of mind.
- Financial stability – Using asset finance means that you can obtain the asset you require without having to take a big lump of cash out of your cash flow; this ensures you have the money to meet day-to-day liabilities. Also, interest rates are usually fixed and agreed in advance so you can easily plan for the cost of repayments.
- The ability to obtain the latest equipment – Asset finance allows you to purchase goods which you may not otherwise be able to afford. Having the latest equipment can promote sales (e.g. display equipment) or allow you to keep pace with technology. All this can make your business more efficient, reliable and productive by meeting delivery dates, achieving better margins and becoming more competitive.
- The capacity to grow – The ability to buy the asset you require without restricting the amount of cash you have available provides you with a great opportunity to grow your business. You will have the cash and equipment necessary to expand your business’ skills, enter new markets or fulfil a greater numbers of orders.
- Time – You will be able to pay off your finance agreement over a number of months or years within the anticipated lifespan of the asset. It is quick and simple to set up your facility so you can focus on running your business.
- Flexibility – Using asset finance can give you the option to buy higher spec goods instead of settling for what you can afford. If you decide to opt for leasing an asset then you can opt to take out a maintenance contract so the responsibility is taken away from you so if the asset breaks down.
Are there any risks associated with asset finance?
- Upfront cash required – You will be required to put down a deposit on the item or pay an initial payment towards your financing facility.
- Cancellation terms – When can you cancel your contract? The cancellation terms of your agreement are important and should be considered before signing.
- Asset lifespan and ownership– Your repayment term will take into account the anticipated lifespan of your asset which means the time you have to repay is likely to be relatively short. The asset will also remain the property of the finance company until the last payment has been made when the title will be transferred to your company.
So if you are looking to purchase an asset or refinance an existing one but can’t afford the full cost right now, asset finance could be the right option for you. Call us now for further information or to get your free, no obligation quote.
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Why choose us?
WF Financial Solutions is an independent broker of invoice, asset and trade financing solutions with links to lenders of all sizes and specialties. WF Financial Solutions has helped many clients through a range of lenders and their varying services and we are proud to offer advisory and introductory services to finance providers that suit your needs.
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Trading internationally, buying an asset or looking to refinance, we’ll help you get the best deal.
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