How Asset Based Finance could be the Key to Growing your Business

Jan 4, 2018
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Why use Asset Finance?

Asset-based finance refers to obtaining financing when they purchase a new asset. This asset is then used as a security against the lending, the two most common kinds of asset finance are hire purchase and lease finance.

The term asset refers to many different items, and is most popular with businesses who desire to purchase vehicles, equipment and machinery. In this guide we provide an overview of some of the key benefits of asset finance.

We additionally look at why it’s such a popular option for businesses that require new vehicles, machines, and equipment every few years.

In this article, we highlight some key benefits of making use of asset finance, and look at why it is an ever-growing option for businesses that require new vehicles, machinery and equipment every few years, but don’t necessarily have the capital to purchase assets in full.

The greatest and most obvious advantage of asset finance is that it provides a business with a way to purchase new machinery that may or may not have been affordable if payments didn’t have the option of being spread out.


What is Hire Purchase?

This means that the title of ownership passes over to the company at the end of the agreed term. Organisations can secure an item of plant or machinery required for their business but sourcing the asset for themselves.


More Flexibility

Following on from the recent economic recessions and subsequent legislation which has made banks’ lending criteria even more stringent, many businesses who don’t necessarily ‘tick every box’ find it hard to get bank loans, whether rightly or not.

There could be any number of reasons why a business doesn’t have a great credit history – as everyone’s situation is different a good asset finance business will judge each finance application on its own merit. The company will of course keep their own lending criteria that will need to be met by any prospective body wishing to lend from them, but there are typically worlds more flexibility than a bank.


Good for Cash Flow

As briefly mentioned previously in the guide, one of the reasons that asset finance is such a popular financing option is because payments are spread out over an agreed time which frees up employed capital. This is ideal for cash flow, with the potential to space from 2 to 5 years and allow for you to pay back in good time.

Asset finance is popular in many industries, namely plant machinery, construction, agriculture, forestry, waste management and print. Therefore, asset finance businesses often are very knowledgeable about this.

Tax benefits through capital allowances, this refers to financial deductions which are available to UK businesses on their corporation tax. These allowances are available on a variety of items and equipment. This means that companies that make kinds of financing options can offset some of these payments.

It’s recommended that you speak to asset finance company on the subject of this, find an Asset Finance Company that offers reliable Leasing and Contract Hire North Wales.

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