Supporting your business with Asset FinancePublished on 1st October 2018 2018-10-01T13:57:22+00:00
Regardless of which sector you operate in, having access to high-quality equipment, tools and technology is a vital aspect of running and maintaining a successful business in the UK. However, acquiring and replacing equipment can be difficult, running up costs that you may not always be able to keep up with. But rather than drawing from your own savings or requesting assistance from family or friends, there is another way to overcome this obstacle. Asset Finance is a package designed to help you gain access to all the equipment your business needs to trade effectively, whilst spreading out the costs that are involved. So, whether you’re looking to bring in additional equipment or upgrade what you already have, here’s how you can support your business with Asset Finance.
What can Asset Finance be used for?
Whether you’re looking to obtain equipment, machinery or vehicles, Asset Finance could offer you the support your business needs going forward. Designed to help make equipment more affordable, Asset Finance not only supports purchases but allows you to borrow equipment or even release the equity contained within your business’ existing, unencumbered assets. Therefore, Asset Finance offers you to ability and confidence to enhance your business’ assets, allowing you to enhance the quality of your services and overcome local competitors in total confidence.
How do I qualify for Asset Finance?
Asset Finance offers your business access to a variety of products, each using the equipment involved in the agreement as collateral, boosting lender confidence and helping to make this package accessible to a wide range of businesses and financial situations. And although lenders will usually request permission to review your business’ credit profile, possessing an adverse credit rating won’t always lead to a rejection. This is because lenders will also take into account a variety of other factors, depending on the product, such as your current income. Therefore, you could be asked to provide documents ranging from recent and past bank statements and profit and loss statements to cash flow forecasts.
In addition, if you’re refinancing an unencumbered business asset in order to generate a lump sum, you will also need to submit collateral documentation outlining the type, model and brand of the asset, as well as your proof of purchase. Plus, a qualified surveyor will also be sent to review its condition and carry out a valuation.
What Asset Finance solutions can I apply for?
What makes Asset Finance such an invaluable tool for all manner of UK businesses is that it provides access to a range of finance solutions, granting you the ability to choose the most appropriate method of acquisition for your needs. So whether you’re looking to support a purchase, borrow equipment or release equity in your current assets, Asset Finance offers you the opportunity to apply for either: Hire Purchase, Leasing or Asset Refinance.
If you lack sufficient capital to purchase an asset outright, Hire Purchase is a useful alternative. With Hire Purchase, you could set up an agreement that allows you to eventually gain ownership of the asset in question. It works by the lender purchasing the asset on your behalf from a supplier, and the asset itself is used as collateral. But before you can begin making full use of the asset, you’ll first need to pay an Initial Deposit. This is usually in the region of 10% of the asset’s total asking price (including VAT), but is subject to negotiation and, as such, can vary. Once the initial deposit has been settled, you’ll be able to make full use of the asset in your business’ day-to-day operations, providing you keep up with the repayment scheme. Hire Purchase agreements can last up to 5 years, during which time you’ll need to make Fixed Monthly Repayments, plus interest. Once the agreement has been fully repaid, ownership of the asset is transferred to you.
If your business needs access to a particular asset for a limited time only, or one that quickly depreciates in value, borrowing the asset for a period of time may be more appropriate. Leasing agreements usually last 5 years but, if the asset is particularly expensive some lenders may allow you to extend this up to 7 years. During this time, you’ll need to make Fixed Monthly Rental Payments, which take into account the asset’s purchase price and it’s predicted worth once your agreement ends. You may also be responsible for maintaining the asset and setting up an appropriate insurance policy. Depending on the type of lease you choose (eg. Finance Lease, Contract Hire), you can either return the asset, extend the term or upgrade to another model at the end of the agreement.
Another product you may want to consider if you’re looking to raise capital is Asset Refinance. This solution lets you release the equity tied up in one or more of your business’ unencumbered assets (equipment, machinery or vehicles), but temporarily transfers ownership of the asset to the lender. Nevertheless, you’ll still have full use of the asset, providing you keep up with the repayment scheme. Plus, the funds that you could acquire using this method usually have few or no usage restrictions attached. This means that you can use Asset Refinance for any number of purposes in and around your business, including growth plans. Whilst the agreement is in place you’ll be required to keep up with a Fixed Monthly Repayment Scheme which typically lasts up to 5 years. As soon as the agreement has matured, with all relevant repayments met, you regain control of your asset.
Thinking about applying for Asset Finance?
In order to provide high-quality goods and services to your customers, making sure that you have access to all the equipment your business needs is a vital responsibility. However, the challenge, as always, is the cost. But without these assets, your ability to maintain effective day-to-day operations and satisfy customer demand will diminish, giving your competitors an advantage. Fortunately, applying for Asset Finance offers you the means to overcome this issue without risking your financial stability. All you need to do is source a suitable agreement from a lender you can trust, which is where speaking with a qualified business finance professional can help.
Rangewell is an Access to Finance specialist and has mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use for SMEs and we’ll also guide you through the application process. So if you’re looking to acquire additional equipment for your business, apply for Asset Finance today or find out more with Rangewell.
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