Wednesday, October 4, 2023
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HomeFinanceIs Asset Financing Right for My Business?

Is Asset Financing Right for My Business?

Are you worried about how can your business raise funds to bring new equipment without overstretching the finances? 

Ever heard about ‘Asset Financing’, yes, that’s the way out for you! 

Asset financing is a method for any business to raise funds to buy or replace existing equipment without extending any further finances. 

Numerous business finance solutions company out there will explain asset finance as a loan that can be employed to individually purchase or lease assets required to move your business forward. Based on the nature of your business, the assets in consideration could be anything from a few essential office equipments to even vehicles and heavy machinery. 

Types of Asset Finances 

Leasing the Equipment

You can use a straightforward leasing agreement for renting the assets your business demands. You’ll get the required equipment for use but not own them. By paying a fixed monthly sum, you can access the assets required for the job or project without using up your capital in any way.

Hire Purchase Contracts

A unique way to arrange asset finances are hire purchase contracts, that can help you in getting immediate access to the required assets once you complete a series of payments. These agreements might last between one to six years. Within hire purchase, you must pay a specified deposit as well as a fixed monthly instalment for the agreed term. 

Refinancing of Assets 

Applicable for the businesses that have already invested a lot on their business-related equipment, and now are in dire need to release some of the capital tied up in those assets. Within this agreement, the lender will buy the equipment from you and will lease it back to you for a predetermined time period, for which you’ll have to make regular payments. 

What are the benefits of embracing Asset financing?

Choosing asset finance can help you in outperforming your competitors by employing advanced and most productive assets for the job. You can have the high-value equipment at minimal risk, as the lending company owns the assets. 

Apart from this, the following are a few significant benefits of picking asset financing as your way to have access to modern business equipment:

Business asset finance solutions can be taken as a much flexible alternative to taking out a bank loan. Such form of financing helps businesses to obtain and use essential equipment and other assets that they require without even coming up with lump-sum payment upfront. All this can further help any business in making it easier to manage all the cash flow and keep their accounts in check while investing in the assets that are vital for the company. 

Most asset finance agreements come with fixed interest rates- assisting you in the proper calculation of what amount you will be spending in coming few years on this equipment. Ultimately, making it more easygoing for the management to plan budgets ahead. 

The risk involved in asset financing is also quite less when compared with any standard business loan. That means you won’t have to pay any penalty charges if you can’t make the payment on time; instead, you’ll only lose the equipment. This further means that there’ll be no impact on your cash flow and you’ll be effectively paying for what you require. 

In the end, remember that asset finance is a viable source of lending. Still, you must have enough stability and sufficient cash flow to suffice the financial repayments over the forecasted term. 

Eada Hudes
Eada Hudes
Eada Hudes is an student whose experiences in life make her really tougher than anyone else. She can lend you expert tips on diverse topics ranging from relationship to fashion, making money, health and so on. Her write-ups are a window into her thoughts and knowledge.
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