How Could Asset Finance Help My Business?
Cash flow is very important in any business, which means that balancing money in with money out can be a bit of a challenge, especially when you want to expand. Wages, rent, stock payments, insurances and other costs all have to be considered before any investment in new equipment. But without new assets, it may be difficult to grow your business.
Asset Finance could be the answer. In fact, in 2018, the Finance & Leasing Association recorded that £33 billion-worth of business assets were funded in this way. That’s around a third of all UK business resources!
When you’re thinking about acquiring new machinery, vehicles or office equipment, it’s often easier to spread the cost over a period of time rather than make a large one-off payment that might jeopardise meeting your regular financial commitments. Of course, a bank loan is always an option, but with volatile interest rates and the added risks of using property or other equipment as security, Asset Finance is a safe and predictable alternative.
How Can My Business Use Asset Finance?
The list of items that can be acquired using Asset Finance is long and varied, and includes vehicles and equipment for sectors such as agriculture and construction, marine and aviation, engineering and technology, printing and catering, and even green energy and medicine.
Acquiring any of these items through Asset Finance could mean that your business is able to update aging equipment in order to make processes more efficient and profitable; increase the volume of products or services offered to achieve additional income; or expand by providing a new or extended range of products or services for a wider customer base.
With Asset Finance, regular and fixed monthly payments allow better planning of expenses than can be achieved by using a large capital outlay to purchase an item. By adjusting the length of your finance contract, Forza Finance can make sure that payments don’t exceed your monthly budget so that you still have enough cash to settle other commitments.
Both new and used vehicles or equipment or can be acquired using Asset Finance which can also be utilised to release equity in any already-owned assets (Asset Re-financing). As an unsecured means of borrowing, you can be sure that if a number of payments are missed, for whatever reason, you’ll only lose the asset and not any other vital part of the business.
What Asset Finance Options are Available for My Business?
When it comes to finding the most suitable Asset Finance package for your business, the experienced team of advisors at Forza Finance will be more than happy to discuss your alternatives. Together, we’ll build the right agreement that will allow your business to take advantage of one or a number of new assets with the minimum risk and little disruption to cash flow.
The various different options may include:
This is a popular choice for buying anything from processing equipment to cars to a fleet of helicopters and is ideal for your business if you are intending to make use of the asset over a period longer than the contract length and/or sell it on afterwards.
- Not secured on any other business or personal assets.
- Pay an initial low deposit of around 10% of the purchase price.
- The balance (plus interest* and admin fees) is spread out over a number of equal monthly instalments, usually over a period of one to six years.
- Adjust the deposit amount and length of contract to achieve a manageable monthly payment. Also structure payments to account for seasonal fluctuations in cash flow, if necessary.
- Once the final payment is made, your business will have complete ownership of the asset(s).
This flexible option allows early settlement of the loan, when you may also be eligible for a rebate on some of the interest charges. For tax purposes, you are the owner of the asset(s), and therefore should be able to claim capital allowances as well as offset the interest and charges against your business’ pre-tax profits, and reclaim VAT paid (if applicable).
*interest rates are typically lower than a bank loan
Lease Purchase or Balloon HP offers many of the same advantages of ordinary HP regarding manageable, predictable payments, with the additional bonus of being able to defer part of the loan until the end of the contract, thereby keeping monthly payments lower than you might expect with HP alone. At the end of the agreement, a final lump sum (balloon) payment is required to purchase the vehicle in full.
- The final balloon payment is calculated, based on an agreed mileage or condition and age of the asset(s) at the end of the contract.
- Adjust the length of the contract to achieve a monthly payment that fits in with your budget.
- A deposit isn’t compulsory but it will reduce the amount due in your monthly payments.
Once again, you can settle the contract early by paying the settlement fee at any time, receiving the appropriate interest rebate.
Re-financing provides quick access to the capital in an asset so it can be invested elsewhere. Once secured, the funds can be used to buy another asset outright, as a deposit on a new Asset Finance agreement or as part of your business’ general cash flow.
- Use already owned assets as collateral for funding replacement or additional items to help grow your business.
- You can continue to use the existing asset while borrowing money against it.
- Any current finance agreement will be dealt with by Forza Finance and extended as appropriate.
Releasing capital in existing assets puts your business in a much stronger financial position for contract negotiation and applying for tenders, etc.
If you’d prefer not to own the asset but benefit from its operation, Finance Leasing could be an option. Your business will have exclusive access to the vehicle or equipment without having to pay the full purchase price or being stung by depreciation.
- Access to the asset either immediately or within a few days
- Fixed monthly payments
- The lender has the responsibility of maintaining and servicing the asset, as appropriate.
- If the asset becomes obsolete, it’s easy to upgrade to a newer version.
How Do I Secure Asset Finance for My Business?
After taking time to understand your budgets and discovering your business needs, Forza Finance will work closely with a wide and exclusive range of finance providers to ensure that you can achieve the best deal that will fit in with your business objectives. This means that all of our Asset Finance packages will be completely bespoke and tailored to your business needs.
Thanks to the flexible nature of Asset Finance, we can find a plan for pretty much every business asset and financial situation. Simply get in touch to discover how Asset Finance can help your business.