Asset Financing

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What is Asset Financing?

Asset financing looks at the use of a company’s balance sheet assets, featuring short-term investments, inventory and accounts that are receivable, to borrow money or take out a loan. The company that is borrowing the funds must give the lender a security interest in the assets. 

The company offers some of its assets out in order to get a cash loan. Businesses use asset finance as a short-term method of problem solving. Directors have probably studied cash-flow forecasts before deciding that asset financing is the right pathway for their business. 

Worried about Asset Financing?

If you are worried about refinancing, we’re here to help you! There are many people who will find themselves seeking a refinancing option. Here at Business Helpline,  We can discuss all of your options and help you plan for a better future.
Call our team today on 0800 088 2142.

Can asset financing help small businesses?

Asset finance can provide a big help to businesses who urgently need to get their hands on some equipment to help with their trade. Given that the minimum deal is £5,000, it’s a very handy solution for many small businesses. 

Who provides asset finance?

A number of banks and private lenders provide lots of asset finance products. Talk to us before committing to any specific lender. We have expert contacts and partners who could fix your financial needs. 

What are the different types of asset finance?

There are two main types of asset finance: hard assets and soft assets. Hard assets are primary equipment pieces and vehicles. Soft assets have little second-hand value, like IT. 

What is the difference between asset financing and asset-based lending?

In asset-based lending, the asset you have put forward acts as collateral if anything goes wrong when you are repaying your loan. This means that, if you have put your house down, your house can be seized by the lender and it can be sold to repay the remainder of your loan. 

This is not the same in asset financing, where assets are not directly held up as collateral for a loan failing. They are used to qualify somebody into a lending solution but that is it. 

What is the difference between secured and unsecured lending?

There are two types of borrowing routes to go down: secured and unsecured loans. 

A secured loan is more common, where a business borrows money against an asset of their company. The lender now has something to hold the borrower over, and they are therefore more likely to offer them something to borrow. 

Unsecured loans do not involve collateral but the lender might have a general claim against the borrower, just in case they do not make repayments on time. If a company goes bankrupt, secured creditors will typically receive a bigger amount of their claims. That means secured loans usually have lower interest rates, making them more appealing for businesses who are seeking to go down the route of asset financing.  

What are the advantages of asset financing?

▪️ Easier to get than traditional bank loans

▪️ Fixed payments make budgeting and cash-flow easier to manage 

▪️ Many agreements have fixed interest rates

▪️ You will only lose assets if you are unable to pay

What are the disadvantages of asset financing?

▪️ While you will only lose assets, these assets could be of big importance to your business.

▪️ Value of the assets which a loan is secured against can vary, with the possibility of low valuations.

▪️ Long-term funding is more effective.

Get in touch

If you are unsure whether refinancing this pathway will be right for you, don’t hesitate in contacting us.

Call one of our compassionate experts at 0800 088 2142.

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Are you eligible to claim Director Redundancy?

As a Limited Company Director you may be entitled to claim Director Redundancy – Average UK claim is £9,000*.

Asset Financing FAQs

What can I buy with asset financing?

You can buy anything that is used by your business for trade, so long as it is removable. Common assets can vary from IT and phone systems to medical equipment to office furniture. The specific will all depend on what the business does on a day-to-day basis. 

How much can I borrow through asset financing?

You can borrow anything ranging from the thousands to the millions. Please check with us what you want to borrow and we can provide you with an appropriate lender.

How does asset financing differ from other forms of refinancing?

Asset finance is not repayable on demand like other solutions such as overdrafts. It is a secured loan so lending criteria will differ compared to a bank loan.

Asset finance has lots of different products, that can suit your specific financial situation, when moving on a business asset.

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