A Beginner's Guide to Asset Finance

Businesses traditionally access capital from banks or other financial institutions when they need funds to meet their growth objectives. However, plenty of alternative financial institutions may be more appealing to companies looking to expand. Among these options is asset finance. Here's what you need to know about asset finance. 

What is Asset Finance?

Asset finance is a form of financing that allows businesses to obtain assets without paying the total cost upfront. It involves borrowing money to purchase the asset, with the loan or lease payments spread out by term. 

Businesses of all sizes use this type of finance to cover a variety of assets, such as vehicles, machinery, equipment, real estate, and more. Asset finance is an excellent alternative for businesses that need to acquire assets without having to shell out a large amount of money. 

Why Consider Asset Finance for Your Business?

Asset finance helps companies acquire new equipment and other assets without taking on a sizeable debt or using cash reserves. 

This type of financing allows organisations to spread the costs of the selected asset over a given timeframe, making it more affordable and manageable. Businesses can tailor the terms of the agreement to suit their needs. These flexible terms mean your company can choose the repayment period, interest rate, and other features to align with their budget. 

Asset financing can also help businesses to free up their cash flow, allowing them to reinvest in other areas of their business. Asset finance is an excellent choice for businesses that need assets quickly without using all their working capital. 

Which Industries Benefit from Asset Finance?

Asset finance is ideal for businesses of all sizes, from small startups to large corporations. It provides the funds necessary to acquire capital assets like vehicles, equipment, and machinery. 

Businesses that are expanding and need to purchase new equipment or vehicles, such as construction and transportation companies, benefit from asset finance. Asset finance is also perfect for industries transitioning towards digital transformation. 

Additionally, businesses that have seasonal or cyclical cash flow patterns, such as retail stores, can also benefit from asset finance. By spreading payments over time, companies can preserve their cash flow and avoid piling upfront costs. 

How Long Can You Take Out Asset Finance? 

The length of time you can take out asset finance depends on the type of asset you're financing. 

For instance, if you're looking to finance a vehicle, you can take out asset finance for up to five years. You can take out asset finance for up to seven years for sizeable assets, such as machinery. If you're looking to finance office equipment, you can take out asset finance for up to three years.  

Ultimately, the length of the asset finance loan you take out will depend on your circumstances. 

To sum it up, asset financing works for businesses looking to expand or upgrade their assets without significantly affecting their organisation's financial position. Reaching out to a reliable financer is the next stage to achieving asset finance to help your business grow and maintain cash flow.