Fincred CF is a broker of many asset finance solutions. Find out what asset finance is, and how we can help you use it to purchase a new asset without impacting your cash flow.
What is Asset Finance?
The general principle of asset finance is that if your business is looking to purchase a new asset, your business can make an agreement with a finance company to reduce the initial outlay and spread the cost over a long period of time.
Asset finance comes in a number of forms, including hire purchase and asset leasing.
In these finance agreements, the asset(s) being purchased is the security/collateral. The ownership title will not be transferred until the final payment under the agreement is made. If payments are not made, the finance provider may repossess the asset.
How Does Business Asset Finance Work In Practice?
As your asset finance broker, Fincred CF will assess the specific funding requirement of your company and match you with a lender that can meet your needs, acting in your best interests to help you secure a deal with terms and costs that benefit you.
Your new lender will undertake due diligence including looking at your accounts and financial statements in order to assess your ability to meet your payment obligations.
When the process is complete, the asset will be made available to your business and the agreed-upon payment terms will commence.
What Types of Asset Finance are Available?
There are two main areas of business asset finance: hire purchase and asset leases. These can be put towards a range of applications, some of which we explain below.
In a hire purchase agreement, your company can make use of a fixed asset (such as industrial equipment, vehicle fleet or commercial plant and machinery) immediately without having to pay the full cost upfront. Instead, the item is purchased by the finance company, and your company purchases the asset over a fixed period of time.
With equipment finance, business owners can purchase expensive business equipment without the large upfront purchase price. For an example of expensive, business-essential equipment, think about a full room of computers, printers and photocopiers for office staff. However, equipment finance can be used for many different types of equipment.
Plant and Machinery Finance
Finance options may be available to assist in the purchase of plant and machinery assets. These finance arrangements typically run over a period of 1 to 5 years but can last for 7 to 10 years.
Sometimes referred to as inventory finance, stock finance is a type of asset finance that allows you to release cash against goods that your company holds whilst awaiting sale. Stock and inventory finance options are available for raw materials, work in progress or finish goods or products.
Assets used under the terms of a lease remain owned by the leasing company but can be used for the length of the agreement in exchange for money usually paid every month.
Equipment Lease and Operating Lease
An operating lease allows you to rent a piece of equipment for a period of time in exchange for monthly payments. With an operating lease, the length of the lease is shorter than the effective life of the equipment (one year is a typical example) and the responsibility for maintaining and insuring the asset falls on the lease provider (the lessor, rather than the lessee).
Plant and Machinery Lease
Also known as plant hire, this type of lease involves paying periodically for the use of commercial or industrial machinery. At the end of the agreement, which typically lasts for a number of years, the equipment remains owned by the leasing company, though it may be possible to take ownership of the equipment or take out a new lease.
If you require regular upgrades to your assets, a finance lease can be a great option. These are long-term leases and at the end of the lease agreement you may be presented with different options. For example:
- Extending the lease agreement
- Upgrading to the newest model or version of the asset
- Or purchasing the asset with a final payment.
A related asset finance solution is asset refinance, used to release cash against an asset you own or partially own.
Working with Fincred CF, Your Broker for Asset Finance
There are a wide variety of asset-backed lending options available, and it can be hard to know what solution is best for your business. As experienced brokers in the area of business asset finance, FinCred CF will guide you through the process and provide all the advice you need.
We make funding easy for clients nationwide. When you are ready to find an asset finance agreement, or if you just want to learn more, contact us.
We work in partnership with our sister company FinCred IS. With their specialist trade credit insurance expertise, they can offer trade credit insurance policies that complement your asset finance agreement.
UK Wide Industry Statistics
Total value off all sales financed in the UK - £bn
Domestic invoice discounting - £bn
Total number of asset based lending clients
Domestic invoice discounting clients
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