FAQ - Frequently Asked Questions
FAQ - Frequently Asked Questions & Answers
Have a look at frequently asked questions & answers to understand more.
Asset finance is a type of lending used by businesses to gain access to hard assets such as machinery, vehicles and equipment, and soft business assets such as software, office fittings and training. Asset Finance spreads the cost of acquiring such assets, giving you access to new kit when you need it. A benefit is that the profit gained by your business whilst using the asset may offset the monthly cost! Asset Finance can also enable businesses to release cash from the value in assets they already own.
An Asset Finance Broker works closely with the customer to understand their business and requirements. They provide advice and guidance on the most appropriate method of funding and find the best rates available for the business. They are essentially a bridge between the customer and multiple funders, meaning the customer can sit back and relax in the knowledge that their broker is getting them the best deal.
Paying cash upfront for business assets can be expensive and potentially risky for cash flow. This is where asset finance can help by spreading the cost of the asset over a number of years in fixed monthly payments. This also leaves your cash reserves untouched and available for other areas of your business, enabling you to plan ahead financially. Large companies often use Asset Finance for large purchases, because using the asset itself can generate profit to offset the monthly cost.
An Asset Finance Broker works closely with the customer to understand their business and requirements. They provide advice and guidance on the most appropriate method of funding and find the best rates available for the business. They are essentially a bridge between the customer and multiple funders, meaning the customer can sit back and relax in the knowledge that their broker is getting them the best deal.
Paying cash upfront for business assets can be expensive and potentially risky for cash flow. This is where asset finance can help by spreading the cost of the asset over a number of years in fixed monthly payments. This also leaves your cash reserves untouched and available for other areas of your business, enabling you to plan ahead financially. Large companies often use Asset Finance for large purchases, because using the asset itself can generate profit to offset the monthly cost.
A Hard Asset is defined as a tangible item, such as a vehicle, that has a resale value at the end of the agreed term. Other Hard Asset examples would include machinery, plant and manufacturing equipment.
Hard Asset Finance is an agreement between a customer and a lender. The lender pays for the asset in full so that the customer can spread the cost of repayments over up to ten years depending on the asset and its value. The exact terms of the agreement depend on the type of funding. These are explained a little further on.
Asset Finance is a commercial arrangement where the customer will select an asset, the finance company will purchase that asset and the customer will have use of that asset during the lease. The customer simply pays a series of instalments for the use of the asset for the duration of the agreement. What happens at the end depends on the type of the agreement, we will cover that in more detail a bit further on.
Asset Finance is suitable for all types of businesses including Limited Companies, Limited Partnerships, Public Limited Companies and Sole Traders.
A business finance lease is a type of lease in which a finance company is typically the legal owner of the asset for the duration of the lease, while the lessee not only has operating control over the asset, but also has a substantial share of the economic risks and returns from the change in the valuation of the underlying asset.
Leasing helps businesses keep ahead of the game by giving them access to emerging technology and equipment to maintain their competitive edge. Businesses can quickly gain up to date equipment whilst spreading the cost, meaning they can retain their capital to invest in other areas of the business. Leasing also helps businesses to manage their cashflow, forecast and plan ahead. Equally, Leasing can provide a safety net if business critical equipment needs replacing quickly. For example, if a caterer’s oven was to break, they would be able to replace it quickly and continue business as usual.
Soft Assets are differentiated from Hard Assets because they are often intangible and have little or no resale value; a good example of this is software. Soft assets can also include items such as paint, office chairs, fixtures and fittings for projects such as refurbishments.
Soft Asset Finance is similar to Hard Asset Finance in that the bank or funder purchases the items required by the customer who then pays the bank or funder in fixed instalments over an agreed term. Soft Asset Finance is not offered by every bank or lender because there is often no tangible asset that can act as security.
The first thing you need to establish before approaching a broker or lender is the equipment or asset your business requires and its rough value. This could be in the form of a quote from a supplier. Once you have this information you will generally find that the most beneficial route is to speak to a Finance Broker.
Traditionally, businesses have approached their principal bank and then only approached a Broker if their application is rejected or if the rate offered is high. By speaking to a Broker in the first instance you can compare quotes from multiple funders and know that your Broker is working hard to get you the most appropriate deal and type of funding for your business.
Traditionally, businesses have approached their principal bank and then only approached a Broker if their application is rejected or if the rate offered is high. By speaking to a Broker in the first instance you can compare quotes from multiple funders and know that your Broker is working hard to get you the most appropriate deal and type of funding for your business.
Yes, businesses can acquire second-hand assets such as vehicles, plant and refurbished equipment using a finance agreement. Different lenders have different terms for these agreements, meaning that working with an experienced broker will save you time as they will only speak with appropriate lenders.