For any business, there are certain assets that are vital for growth and remaining competitive within your market. However, building up sufficient capital to invest in important assets can take time, whereas acquiring them could significantly aid growth and profitability. Asset finance provides an effective funding solution to acquire important assets and allow you to use your capital for other uses.
What is asset finance?
Asset finance is a type of business financing that allows businesses to acquire the equipment and assets they need to grow their operations. Any business can benefit from this kind of financing, but it can be especially beneficial to SMEs seeking quick growth.
Under asset financing, the business owner borrows money to purchase an asset, which is then used as collateral for the loan. This means that the lender retains a security interest in the asset until the loan is repaid.
This form of finance can be used to find the purchase of a wide range of assets, including:
- Commercial vehicles including cars, vans, trucks, buses and coaches
- Engineering plant and machinery
- Production machinery and equipment
- Agricultural machinery
- IT and office equipment
- Office furniture
Asset finance is a popular financing option for businesses in various sectors that need to acquire these assets without delay to remain competitive in their respective market and grow the company, but do not have the capital to do so. Entering into an asset finance solution allows businesses to make decisions quickly, confident that they have access to the working capital they need.
Types of asset finance
Depending on the assets that you need to invest in, there are a number of different types of asset finance, the main ones being:
Hire purchase
Vehicles, machinery and equipment can be acquired under hire purchase, which allows for assets to be received right away, but be paid for in instalments, rather than in a single lump sum. Once all instalments are paid, you own the asset, however, the finance provider owns the asset up until that point.
Finance leasing
A finance lease differs from hire purchase, as although a finance provider purchases an asset on your behalf, they then rent it out to you over an agreed period. Once this rental period is complete and the cost of the equipment is paid for, you then have the opportunity to extend the rental period, sell the asset to a third party, or return it.
Equipment leasing
Equipment leasing is a similar agreement to finance leasing; however, it allows you the option to then own the vehicle or equipment at the end of the leasing contract, extend the lease, return the asset to the lender, or upgrade it.
Operating leasing
Operating leasing is a financial agreement where a company rents and uses an asset without ownership. This is a popular choice for businesses seeking to update technology on a regular basis to stay ahead of competitors, without having to pay the full capital cost of the asset. Operating leases are treated as operating expenses, rather than capital expenses, which means that the asset does not need to be recorded on the balance sheet.
Asset refinancing
Asset refinancing enables businesses to release cash by leveraging their own assets, which can serve as a useful tool for consolidating outstanding debt,
Acquiring Asset Finance
If you need to access to assets such as vehicles, plant, machinery or other equipment, or to renew or maintain existing assets, but don’t have the capital to do so immediately, then seeking an asset finance solution may be the right step.
At Onsite Finance, we can offer a range of hire purchase products to help you grow your business and ensure you remain competitive in your market. We can provide leasing and hire purchase options to help you spread the cost of your assets over terms up to 10 years, and at rates of as low as 3%.
