Asset finance is designed to support the upfront payment of assets such as machinery, office equipment, vehicles or property.
The loan is secured against the purchased items, which can be seized if the loan is not repaid.
There are different types of asset based lending contracts, which all work slightly differently, so it is important to ensure you have the most appropriate loan solution.
In some instances, the lender buys the assets you need and then leases them back to you for a set monthly amount. This type of lending is known as Asset Finance or a Leasing Agreement.
Hire Purchase Asset Finance is where your business pays a deposit followed by monthly instalments over 12 to 72 months. Following the last payment, the assets are yours.
Alternatively a Refinancing Agreement can release capital tied up in assets by the lender buying the equipment from you and leasing back.
The ability to purchase machinery required for our company to increase production, but spread the cost over time was invaluable to our growth.
Asset lending is often easier to obtain than traditional bank loans, and with fixed monthly payments it can help cash flow management.
If for any reason you were unable to keep up with the repayments, the only result is the loss of the asset.
However, it can be more expensive than buying the assets outright and they cannot be deducted from your P&L for tax purposes. Repayment terms are usually over a long period of time.
Asset-based lending can be a solution to financing growth for businesses of all sizes. Specialist lenders will even include intangible assets such as Intellectual Property (IP) in addition to physical products.
A form of secured lending Asset Finance can provide a flexible solution with lower monthly costs compared to unsecured loans and short term borrowing.
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Asset lending can be a great solution for many businesses, but it is not suitable for all. At trufe. we will discuss your financial situation and explore alternative avenues to help you get the most appropriate funding package.
Working with businesses at various stages of their life cycle and lenders from across the market, serving all industries, we know how to source the lowest rates for your companies particular scenario from our database of leading providers.
As lending experts, our team will ensure we obtain quick funding decisions with a hassle-free, honest and transparent process.
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