For many businesses, the ability to grow sustainably and take on new customers is dependent on having access to new equipment or machinery. For those who don’t have a large amount of cash available to them or prefer to keep their capital locked in existing assets, asset financing is an excellent solution to get the machinery and vehicles they need. There are a range of different types of asset finance, so it’s important to do your homework and find the best fit for your business.
Typically, this form of financing involves pledging assets on your balance sheet to secure the loan. This can include PP&E, inventory, accounts receivable and short-term investments. In most cases, it is ideal for early-stage companies, startups and those looking to increase working capital in a shorter time frame. It’s also a good option for those who have been turned down by banks due to their credit rating or business plan.
There are a range of lenders who offer Asset Finance Company, with some offering specific types of equipment. You can use a business loans broker, such as Swoop, to identify the right lender for your needs and speed up the process.
Hire purchase, asset refinance and leasing options are available to sole traders, partnerships and limited companies, regardless of their length of time in business. With asset finance, you will make regular payments over a fixed term to lease the equipment. At the end of the term, ownership of the equipment will return to you.
This type of financing is a useful tool for ecommerce businesses looking to invest in warehouse and distribution facilities or improve their IT infrastructure. It can be difficult for an ecommerce business to raise a significant sum of money to fund these upgrades, especially if they are in a growth stage. With this form of finance, the business can save a lot of money and still upgrade its IT systems.
Similarly, a manufacturer or factory that requires specialist equipment may benefit from an asset finance deal. This will enable them to purchase the equipment and then rent it back, allowing them to save cash up front and only spend what they need to. The rental costs can be written off as a tax-deductible expense, meaning the business can save more money than they would by buying outright.
Another great advantage of asset finance is that it is a quicker and more flexible form of funding than traditional lending. You can often receive decisions much quicker than with bank loans, and there are a variety of payment terms that can be tailored to suit your business. Alternatively, you can choose to pay the full amount upfront if that is more suitable for your circumstances. You can even combine this with other types of finance, such as invoice finance, bridging finance and merchant cash advance, to meet all of your business’s funding requirements.