There are a lot of things you need to get a business off the ground. You need an idea, a business plan and possibly employees to help put the business plan into action. One of the most crucial things you need, though, is access to enough financial support and the appropriate lender. If you have had trouble securing a loan from the bank, you’re not alone. It is becoming harder to obtain a traditional form of funding as many banking institutes seem reluctant to offer affordable loans to small businesses.
All is not lost, though, as it might be time to consider asset financing to get what your business needs.
What is Asset Finance?
Asset finance is a kind of lending that allows you to generate funds either to replace equipment that has seen better days or buy new equipment without it pushing your budget too much. You can use asset financing to fund the purchase or leasing of assets your business needs to grow. The type of assets this can cover will depend on the type of business you have.
What Asset Finance Options Are Available?
There are many different forms of asset financing available, however there are two main types. These are – equipment finance to help you acquire additional necessary assets and loans against equipment/assets you already have.
Let’s look at three specific asset financing options in greater detail.
This form of asset financing involves the establishment of an agreement for leasing whereby you just rent items and equipment you require, but will never own them, even at the end of the leasing period.
With leasing asset agreements, the lender will buy the assets you need and then rent them out to you at a monthly premium. Therefore, you get use of the assets your business needs, without needing to dip into your capital.
Asset refinancing agreements involve businesses who have equipment they’ve already invested in but need some of the capital that’s connected to that equipment. In this instance, the financer will purchase your assets/equipment and leave them to you for an agreed time period.
Hire purchase contracts are one of the most common and popular form of asset finance agreements. They give you direct access to the assets you need. After making a set number of payments, you will own the asset. These have terms of 1 to 6 years. You will be required to pay a deposit and then regular monthly payments.
Why Choose Asset Finance?
While physical assets may be crucial to the success of your business, they are also often incredibly expensive. It can help avoid dipping into your capital and leaving you with cash flow issues. Asset finance can also be an effective way to get things moving for your business, by giving you access to additional equipment that can increase your productivity.
Asset finance may not suit everyone, but if you need access to funds to buy new equipment or for any other reason, it can be a very beneficial option. Always read through everything thoroughly, though, and make sure you are not paying for anything you don’t want or need.