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Asset Finance

Access easy and simplified cash flow to acquire business legitimate tools (vehicles & equipments) through Asset Finance.

Access easy and simplified cash flow to acquire business legitimate tools (vehicles & equipment) through Asset Finance. No need to outright put all your money on buying assets. Rent and let them pay for themselves. Choosing Asset Finance buys your business more time to repay the loan and prevents capital strain on the business.

Table of Contents

What is Asset Finance?

Asset finance is a way for businesses to get the money they need to buy things like equipment, machinery, vehicles, or real estate. Instead of buying the asset outright, the business borrows the money to pay for it. It then pays back the loan, usually with interest, over time.

In asset finance, the asset being financed serves as collateral for the loan, meaning that if the business defaults on loan, the lender can seize the asset to recoup their losses. This type of financing is a way for businesses to acquire the assets they need to operate or grow without having to make a large upfront payment.

There are several types of asset finance, including lease financing, equipment financing, and commercial real estate financing. With lease financing, a business can rent equipment or machinery and have the option to buy it at the end of the lease term. Businesses can get the money they need to buy equipment through equipment financing. The equipment is used as collateral for the loan. Businesses can buy or refinance commercial real estate property with the help of commercial real estate financing.

Asset finance can be a cheap way for businesses to get the assets they need to run or grow. It can also be a flexible solution that can be changed to fit the needs of the business. It can also help businesses conserve cash and preserve their working capital, as they only need to pay for the asset as they use it.

What is the difference between asset finance and a loan?

Asset finance and loans are two different types of financing options for businesses.

Asset finance is a type of financing in which businesses use their assets, such as equipment, vehicles, or real estate, as collateral to get money. The lender then uses the assets as security for the loan and takes ownership of the assets if the business is unable to repay the loan. This type of financing is often used by businesses that need to purchase or upgrade equipment, or refinance existing equipment loans.

A loan, on the other hand, is a type of financing in which a business borrows a specified amount of money and repays it, with interest, over a fixed period of time. Loans can be secured or unsecured, meaning they may or may not require collateral. Secured loans are backed by the borrower's property, while unsecured loans are based on how good the borrower's credit is. One can get a loan from a bank, a credit union, or an online lender. Loans can be used for many things, like working capital, growing your business, or paying for unexpected costs.

In summary, the main difference between asset finance and loans is that asset finance uses assets as collateral, while loans can be secured or unsecured. Additionally, asset finance is often used for specific purposes, such as equipment financing, while loans can be used for a range of purposes.

How does Asset Finance work?

Asset finance is a type of financing that lets businesses buy or improve assets like equipment, vehicles, or real estate by using the assets themselves as collateral for the loan. Here is how it works:

  1. Evaluation of assets: The lender evaluates the assets the business wants to use as collateral, including their value and condition.
  2. Agreement and repayment terms: If the assets meet the lender’s criteria, the business and lender agree on the loan amount, interest rate, and repayment terms.
  3. Loan disbursement: The lender disburses the loan amount to the business, which can then use the funds to purchase or upgrade the assets.
  4. Repayment of loan: The business repays the loan, with interest, over a period of time, typically ranging from one to five years.
  5. Lender’s ownership of assets: If the business is unable to repay the loan, the lender takes ownership of the assets.

 

Asset finance is a flexible way for businesses to obtain the funds they require to purchase or improve assets but do not have on hand. It lets businesses use the assets they buy as security for the loan, making it easier for businesses to get financing and lowering the risk for the lender. Asset finance can also be used to pay off loans for already-owned equipment. This frees up cash flow and could lower the overall cost of financing.

What is an example of asset finance?

An example of asset finance is equipment financing. With this type of financing, a business can buy new or used equipment by putting the equipment itself up as collateral for the loan. The lender provides the business with the funds to purchase the equipment, and the business then repays the loan, with interest, over a set period of time.

For example, a small company that makes things needs to buy a new machine to make more things. The company applies for an equipment loan, which is approved based on the value of the machine being purchased. The lender disburses the loan amount to the business, which can then purchase the machine. The business repays the loan, with interest, over the next three years, using a portion of the increased revenue from the increased production capacity.

Equipment financing is just one example of asset finance. Other examples include vehicle financing, real estate financing, and inventory financing. In each case, the loan is secured by the asset being financed. This lowers the risk for the lender and makes it easier for businesses to get loans.

What are the different types of asset finance?

There are multiple different types of asset finance, including:

  1. Equipment financing: This type of financing allows businesses to purchase new or used equipment by using the equipment as collateral for the loan.
  2. Vehicle financing: This type of financing allows businesses to purchase vehicles, such as cars, trucks, or vans, by using the vehicles as collateral for the loan.
  3. Real estate financing: This type of financing allows businesses to purchase or refinance real estate by using the real estate as collateral for the loan.
  4. Inventory financing: This type of financing allows businesses to finance their inventory by using the inventory as collateral for the loan.
  5. Leasing: This type of financing allows businesses to use equipment, vehicles, or other assets without owning them outright. The business makes regular payments to the lender, who retains ownership of the asset.
  6. Hire purchase: This type of financing allows businesses to purchase assets by making regular payments over time. The business has the option to own the asset at the end of the agreement by making a final payment.
  7. Factoring: This type of financing allows businesses to receive an advance on their accounts receivable. The lender provides a percentage of the value of the accounts receivable, and the business repays the loan, with interest, when the accounts are paid.

Each type of asset finance has its own specific features and benefits, and the best option for a business will depend on its specific needs and circumstances. It’s important for businesses to carefully consider their options and choose the type of asset financing that best suits their needs.

Is asset finance easy to get?

The ease of getting asset finance depends on several factors, including the type of asset being financed, the value of the asset, the creditworthiness of the business, and the lender's criteria.

For example, it may be easier to get equipment financing for a well-established business with a good credit history and a valuable piece of equipment than for a new business with no credit history and assets that are not as valuable.

Additionally, some types of asset finance, such as leasing or hire purchase, may have more flexible criteria than traditional loans, making them easier to obtain. On the other hand, there may be stricter rules for real estate financing or inventory financing because the assets being used as collateral are worth more.

In general, it's easier to get asset finance if the business has a strong credit history, valuable assets, and a clear plan for using the financing to grow the business. It's also important for businesses to shop around and compare different financing options to find the best fit for their specific needs. You can get Asset Finance in UK

Key Benefits of Asset Finance

Asset Finance offers many advantages over traditional forms of credit loans. As the industry is still getting acquainted with it, its rising popularity ensures more borrowers and lenders partake in the cash fund pool.

Asset finance provides several advantages to businesses, including:
  1. Access to funds: Asset finance allows businesses to purchase or upgrade assets they need to grow and operate, even if they don’t have the necessary funds available.
  2. Reduced risk: By using assets as collateral for the loan, asset finance reduces the risk to the lender and makes it easier for businesses to secure financing.
  3. Flexible repayment terms: Asset finance offers flexible repayment terms, allowing businesses to choose a repayment schedule that fits their budget and cash flow.
  4. Tax benefits: In some cases, asset finance may provide tax benefits, such as tax deductions for interest paid on the loan.
  5. Improved cash flow: By financing assets instead of paying for them upfront, businesses can preserve their cash for other investments and expenses.
  6. Upgraded assets: Asset finance allows businesses to purchase or upgrade assets they need to grow and operate, leading to improved efficiency and competitiveness.
  7. Opportunity to own assets: Some types of asset finance, such as hire purchase or leasing, give businesses the opportunity to own the assets they use over time, rather than renting them.
Asset finance is a flexible way to get the money a business needs to grow and run, while still keeping cash flow and lowering risk. It’s important for businesses to carefully consider their financing options and choose the type of asset financing that best suits their needs.

Minimal Default Risk

With minimal interest rates, the chances of defaulting on the payback are very less since repayments on agreed interest rates are done automatically on the earned revenue.

Nominal Interest Rates

Bases on the loan amount, certain interest rates shall be applicable. Repayments can be separated over several months or years for hassle-free returns. Other than interest rates, no hidden service or charge whatsoever while borrowing from a lender through asset finance.

Quick Cash Access

Lenders can quickly assess the turnover of the borrower through previous transaction history and release funds quickly. Asset Finance sees the highest number of applications across many financial options.

Who is eligible for Asset Finance?

Following are the key requirements to access Asset Finance in the UK:

  • UK trading business with a UK-based bank account.
  • Turnover over at least £10,000.
  • LLPs (limited companies, limited liability partnerships) or registered sole UK-based traders.
  • Active business operations documents.

Small and medium-sized businesses can apply for Asset Finance Benefits if they adhere to the above standards and certain lenders’ terms and conditions.

Which is the best asset finance service provider in the UK?

It's difficult to determine the single best asset finance service provider in the UK as the best provider will depend on the specific needs and circumstances of each business. It's important for businesses to shop around and compare different providers to find the best fit for their specific needs. It's also a good idea to consider factors such as the interest rates, repayment terms, and level of customer service offered by each provider when making a decision.

Frequently Asked Questions

Over a period of one year to seven year, one may avail repayments under the asset finance option. 

Asset Finance caters to all types and sizes of industries in the UK. You can take advantage of asset finance for hire purchases, finance leases, asset refinance, construction, gym equipment and many more. 

A good credit score is a criterion for funding via Asset Finance. This is because it reduces the lenders' risk from the habitual defaulters. Some lenders, however, may allow you to borrow asset finance even with a bad credit score, but mostly at the cost of an increased factor rate.

Asset Finance does require you to furnish a security or collateral tied to land or property to avail of its benefits. 

These are our key finance options that are favorites among the borrowers.

  • Unsecured Business Finance
  • Property FInance
  • Recovery Loan Scheme
  • Revolving Credit Facility
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