Spread the Cost of Your Next Asset Purchase

Widely used in business this finance is predominantly used to purchase new assets however can also be used to unlock capital tied up in assets already owned and paid for.

If you are thinking of making a purchase of an asset, new or second hand, in your business you have two choices. You can either pay for the item in full or you can use finance to help spread the cost and help your cashflow. In a world where is cash is king, financing arrangements can help keep the cash in your business for longer.

Assets are categorised as either ‘hard’ or ‘soft’. Examples of each are

Types of Asset Finance - Hire Purchase

This allows you to purchase the asset and spread the cost over a set period of time. Balloon payments are sometimes use, this is where you pay a lower amount on a monthly basis throughout the term of the agreement and have a larger amount to pay to own the asset at the end of the term or you can give the asset back.

Benefits of Hire Purchase

More time to repay – Manage cashflow by spreading the cost over the life of the asset
Seasonality – Payments can be structured to take account of seasonal fluctuations in your cash flow
Keep control - You are the owner of the asset for tax purposes and can normally claim capital allowances
Tax efficient - You can offset your hire purchase interest and charges against pre-tax profits
Reclaim VAT on purchases – If VAT registered

Refinance / Capital Raise

Perhaps your business needs some additional working capital or you are trying to fund an asset purchase not suitable for asset finance. Using this method can often be quick and efficient in providing your business with much needed funding, unlocking capital that would otherwise be tied up in your assets.

Benefits of Refinance / Capital Release

Efficiency - Uninterrupted use of the asset
Spread the cost further – Many lenders can take over the finance agreement you have with another provider and extend the term to assist in your cashflow.
Fund your growth - Give your business a cash injection or use the money to buy other assets that may not be accessible through hire purchase or leasing agreements
Make fast decisions - Releasing capital can help you make faster decisions when negotiating business contracts

Finance Lease

A finance lease lets you use the equipment you need with having to buy it outright which can really help your cashflow. You ultimately rent the asset off the finance company over a period tailored to you and the type of asset.

Benefits of Finance Lease

Efficiency - Uninterrupted use of the asset
Spread the cost further - We can take over the finance agreement you have with another provider and extend the term
Choice - Give your business a cash injection or use the money to buy other assets that may not be accessible through hire purchase or leasing agreements

Operating Lease

This is similar to a finance lease however you and operating lease is only for part of the asset’s life. You pay a reduced rental because the cost is the difference between its initial costs and the residual value at the end of the agreement.

Benefits of Operating Lease

Low initial outlay - Quick access to the asset you need without a heavy upfront investment
Freedom - Full use of the asset without having to buy it outright
Flexibility - Option to re-rent, purchase or return the asset at the end of the term
Pay less - Rental cost is reduced as it is based on a percentage of the original capital cost
Off balance sheet funding
Reduce costs - Reclaim VAT on

Asset Finance FAQs

How long can I borrowfor?

The term over which you can borrow depends on the type of asset. The borrowing is in line with the life expectancy of the asset being bought. ‘Hard assets’ usually have a longer life expectancy there you can spread the payments over a longer term, whereas the opposite is true of ‘soft assets’.

Will I need to give security?

This depends on a number of factors. Typically the primary source of security for the lender is the asset that is being bought. Often a lender will ask for personal guarantees to support the loan, however this is determined by the strength of the business and how much you want to borrow against the asset. If you are putting down a large deposit the need for additional security diminishes.

How much can I borrow?

The amount you can borrow is determined by two factors. What is the value of the asset and what parentage of that value will the lender advance. What level of repayment is deemed to be affordable by the business.

Why work with us?

We have an extensive panel of lenders meaning that we have most eventualities covered. Using our experience we can quickly assess your requirements and match you with a potential lender. We will also help you decide which of the finance options is best suited to your circumstances to keep your businesses as strong as possible. With many years’ experience across all sectors of business we’re confident we can find the right solution for you.

Asset Finance