Asset Finance
What is Asset Finance?
Asset finance allows a business to purchase or lease new assets such as equipment, machinery or vehicles without a large upfront cost.
Why Choose Asset Finance?
Asset finance is an ideal option for businesses looking to acquire assets without making a significant upfront investment.
How it Works
Asset finance uses a business’ balance sheet assets to raise finance. For funding, the business must provide the lender with a security interest in the assets.
Asset Finance at a Glance
Eligibility:
Ltd Companies looking to purchase new assets such vehicles, machinery, equipment or even release cash from existing owned assets.
Amounts:
Loans from £10,000 +
Turnaround time:
Decisions within 48 hours
Terms:
1 - 7 years
Options available:
Hire Purchase, Finance lease, Asset refinance
Interest Rates:
From 3.99% per year
Asset finance allows businesses to acquire valuable assets like machinery, vehicles, or technology without needing to make large upfront payments. Instead of paying for assets in full at the time of purchase, businesses can spread the cost over an agreed period, improving cash flow and holding back capital for other essential business operations. At Elite Business Funding, we are a leading provider of asset finance in Essex, offering flexible solutions tailored to the unique needs of your business.
What is Asset Finance?
Asset finance can help business to fund the purchase or leasing of assets, without requiring large upfront payments. The cost will be spread over an agreed term, allowing you to preserve capital and maintain cash flow, whilst still accessing the assets needed to drive growth and efficiency.
Asset finance can be especially useful for new or expanding businesses that may not have the immediate capital to invest in high-cost equipment or machinery. Elite Business Funding can offer asset finance for a start-up business or an established company looking to scale operations, providing quick and efficient access to the funding you need.
What can Asset Finance be used for?
Asset finance can be used for both hard and soft assets. Hard assets are tangible items like machinery, equipment, and vehicles, which have intrinsic value and can be resold. These are typically financed through Hire Purchase or Lease Finance.
Soft assets are intangible or depreciate quickly, such as technology, office furniture, and IT systems, and generally have little resale value. Whilst financing terms may vary, asset finance provides businesses the flexibility to acquire both hard and soft assets without impacting their cash flow.
Hard assets are physical items of value such as:
- Agricultural machinery
- Heavy good vehicles or fleets
- Manufacturing equipment
- Plant equipment
- Construction vehicles
Soft assets are considered those with little or no second-hand value at the end of their lease period such as:
- Computer hardware and software
- Office furniture
- Medical devices
- Security systems
- EPOS systems
Why choose Asset Finance?
Asset finance can be an advantageous option for businesses due to the funding being based on your business balance sheet (which shows your inventory, physical assets, as well existing debtors). For this reason, asset finance is sometimes used to raise capital where more traditional unsecured lending options are not available.
Asset finance is also an ideal option where businesses are looking to invest in new assets, whilst maintaining or improving their cashflow. This is because it allows you to pay for an asset over time, as opposed to having to front the full cost upfront. Asset finance therefore allows businesses to continue with their growth and expansion plans organically, rather than having to wait for capital to become available within the business.
Key benefits:
- Use new or existing assets as security for a business loan.
- Refinance existing assets you already own to free up liquid capital in your business for other uses.
- Ideal for financing the purchase of expensive or large machinery, including fleets and vehicles.
- Reduce your tax liabilities by offsetting your monthly repayments.
How does Asset Finance work?
Asset finance enables businesses to acquire or lease assets without the need for large upfront payments. The main types of asset finance available are Hire Purchase (HP), Lease Finance, and Asset Refinance, with each offering distinct advantages depending on your business needs.
There are 2 main types of asset finance available, hire purchase and lease finance, along with an asset refinance option.
Hire purchase (HP)
With a Hire Purchase agreement, businesses pay a deposit followed by regular monthly payments over a set term. At the end of the term, the business has the option to purchase the asset for a nominal fee, known as the ‘balloon’ payment. This option is ideal for businesses that want to own the asset outright once the term ends. This makes it a popular choice for machinery finance and equipment finance, where businesses invest in assets for ongoing operational use.
Lease finance
Lease finance involves the lender purchasing the asset on behalf of the business and leasing it back to them for an agreed period. The business makes regular monthly payments to use the asset, and at the end of the lease, they can choose to purchase the asset or return it. This option is suited to businesses that need equipment for a set period but don’t require ownership. It’s often used for businesses such as manufacturing companies and medical healthcare providers, where they may need equipment without the long-term commitment of ownership.
Asset refinance
Asset refinance allows businesses to unlock capital tied up in assets they already own outright. This can include machinery, vehicles, or even property. The business uses these assets as collateral to secure financing, releasing cash that can be used for other business purposes, such as expansion, improving cash flow, or covering operational costs.
Asset refinance is a common option for agricultural finance, with farmers often using their existing machinery or land as collateral to access much-needed capital for growing their operations or managing cash flow.
Sitting somewhere between both HP and lease finance is another option known as finance lease or capital lease. This is a longer-term lease option designed to last for the duration of the asset’s lifespan. It gives you full use of the asset and you pay for the full value over time. Officially you do not own the asset, and it therefore does not appear on the business balance sheet. This in turn has the benefit of it being possible to offset the rental cost against your profit and claim back VAT which could be a tax efficient option.
At Elite Business Funding, we provide various types of asset finance in Essex, tailoring this service to your business needs. Get in touch today to explore how asset finance can help drive your business forward. Asset based lending is a specialist finance option, often requiring lenders with industry-specific expertise. Our team can help to connect you with the right lender and find you the best rate and terms. For more information please get in touch.
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