Asset funding in simple terms, describes a type of funding that can be used for purchasing a new business asset. It can be used for either acquiring a new asset or for raising finance against an asset which the business already owns.
It can be broken down in to 2 specific categories, hire purchase and lease finance. Hire purchase enables businesses to purchase an asset which is paid for over a period of time, a deposit will be paid to secure the asset followed by a set number of monthly repayments. Lease finance means an asset can be obtained on a hire basis where payments are made on a monthly basis for a set number of months, at the end of the agreement the business can choose to extend the deal, cancel the deal or look for other refinancing options.
Asset finance is a highly versatile funding solution which can be used for purchasing a broad range of business assets including plant equipment, machinery, furniture, IT equipment, catering equipment, commercial vehicles, company cars and much more.
The SME sector in particular finds asset finance incredibly beneficial as they can often find it a struggle to facilitate growth using their own resources. Trying to purchase an asset outright can have a huge impact on cash flow and this can make life difficult if the business experiences unexpected costs that have not been accounted for. Asset finance offers a highly flexible solution that can be tailored to a specific business need.
Aside from its versatility there are also some other broad benefits:
- Budgeting is made easy; payments are fixed for an agreed period so a business will know exactly what they need to pay and when
- Funding is secured against the asset and not the business
- You can purchase the latest products and technology, without having to settle for less expensive or lower specification assets
- Purchase of specific business assets can enable some tax relief on the capital investment
If you have any questions or need some help with an application for asset finance, please call us on 01993 706403 or e-mail firstname.lastname@example.org.