Asset financing allows a business to acquire important assets, replace old equipment, or grow and expand operations without using up cash on hand or needing to raise a lot of working capital ahead of time. If used correctly, it can help to support your business growth by freeing up much needed working capital with little or no effect on your cash flow.
Asset Financing offers flexibility, facilitating the acquisition of brand-new or pre-owned assets, with essential or new cutting-edge equipment, machinery or vehicles, while also enabling you to unlock the inherent value of the assets currently in your possession.
The Benefits of Asset Financing
- Simple application process
- Choice of term to meet individual requirements
- Spread the cost of acquisition rather than purchasing outright
- Tax efficient – offset interest
- Financial safety net
- Preserves existing credit lines
- Fixed payments which help with long-term budgeting
- Little or no upfront cost (minimal deposits may be required)
- Easy to upgrade and stay at the forefront of technological advancements
- Provides a wider choice of equipment due to not being restricted to cost
- You can use crucial business capital you would spend on the asset elsewhere
The Potential Pitfalls
As with any type of lending, there is always a risk of defaulting. If a business misses payments or finds themself in a situation where they are unable to afford the repayments then they risk being charged additional fees, damaging their credit score or having legal action taken against them. Also, be aware it can be more expensive, long term, than buying an asset outright.
Businesses should be certain of their affordability, carefully check the lending terms, and choose the right lender to mitigate any risk.
What is an Asset?
An asset is something of value that a company or individual owns or controls. For a business, assets are resources that have economic value and provide future economic benefits through their use or sale. Assets are listed on a company’s balance sheet and are a major part of its net worth or equity. Proper management and utilisation of assets is important for a business’s operations and profitability.
When it comes to asset financing, almost any asset or equipment can be funded in this way. Examples include:
- IT Equipment
- Yellow goods
- Plant and machinery
- Vehicles
- Office furniture
- Access control, CCTV and security equipment
The list above is not exhaustive, but if your business needs the latest machinery, vehicles or technology and would rather spread the cost over time, asset finance may be a viable alternative to other forms of funding – like a bank loan.
How Can We Help?
If you have specific requirements or are uncertain about eligibility, a quick call to our team is all it takes to explore the possibilities and whether to pursue.
We can put you in touch with an independent business finance team to help you access the finance and funding you need to help your business to thrive. For example, Simply Business Finance have facilitated funding for complete fit-outs and equipment acquisitions across a diverse range of businesses, including retail shops, restaurants, gyms, hotels, manufacturing facilities, and virtually every other type of business.
We have a team of expert professionals who are on hand to help with any of your business’ accounting needs. If you have any further questions or queries, please contact us on 01444 716946 or on 01273 963656, or alternatively email us here for help.
