Could your business benefit from a cash injection? If the answer is yes, asset finance can help you to release capital quickly by refinancing existing business assets, such as equipment, machinery, property and vehicles. As well as freeing up additional capital, refinancing assets can help your business to:
- Improve cash flow and business stability
- Purchase non-standard assets that are difficult to finance
- Invest in new equipment to grow the business
- Invest in new business ventures
- Prevent and manage bad debt and reduce bank debts and overdrafts
- Reduce existing monthly financial commitments by spreading repayments over a longer term
How does asset refinance work?
With asset refinance, your business effectively sells its ownership of an existing business asset to an asset finance provider, while still retaining use of the asset. Your business then makes regular repayments to lease the asset back over a set amount of time, with the option to own the asset outright at the end of the agreement.
Asset refinance normally involves refinancing assets that your company owns in full – i.e. assets that are free from finance. However, if your company owns assets that are subject to an existing finance agreement, you may also be able to refinance them, particularly if the majority of the repayments have been made.
When you refinance an asset, the finance package is usually secured against the asset itself. As well as generally being easier to obtain, asset refinance provides you with greater peace of mind than traditional lending methods, such as bank loans and overdrafts that often require property as security.
Why is asset refinance so popular?
One of the main reasons that asset refinance is so popular is because it allows businesses to release capital on assets that they are already using, whereas many other types of finance apply to the purchase of new assets.
Another reason asset refinance is so popular is due to banks stringent lending criteria, which often makes it difficult and time consuming to secure funding. Asset finance providers are familiar with working with businesses to refinance assets, which means that they can usually offer a quick turnaround – freeing up your capital quickly.
Businesses can use spare capital to purchase new equipment or non-standard assets that are difficult to finance, or to Invest in new business ventures.
What information will I need to provide in order to refinance an asset?
You’ll need to provide information about your business, as well as information about the asset in question, so that it can be accurately valued, for instance you’ll need the asset’s:
- Make and model number
- Year of manufacture
- Year of purchase
- Usage in terms of hours or miles
- Proof of purchase/proof of ownership
Asset refinance is a smart and cost-effective way for businesses to raise cash and free up capital, spreading the cost easily over manageable repayments. As well as improving cash flow issues and business stability, asset refinance provides businesses with the capital to invest and grow.