Asset financing could be a low-risk way to secure long-term financing for your business. Using your assets as security for a loan, you can upgrade your business with financing options, including hire purchase, lease and capital release solutions. We’ve put together five reasons why asset financing could help your business achieve your growth plans.
Increase efficiency and productivity
Working with ageing equipment and machinery can be frustrating and time-consuming as you take time out for repairs and servicing. In turn, that takes a toll on business productivity and efficiency. Access to the latest equipment can improve output and efficiency, helping your business to meet demand and expand. If you have ambitious growth plans, financing options like hire purchase can help you meet the needs of your client base in a more efficient way and so have a positive impact on your profit margins.
Improve cash flow
By spreading your payments over an agreed term, you can budget for regular costs and free up working capital. In addition, if you’re looking for long-term financing, typical repayment terms are between two and five years to match the lifecycle of your business equipment. So, if you need to upgrade your machinery, you’ll be in a position to do so.
One of the benefits of asset financing is the financing options available. If your business has more available cash flow, a hire purchase solution means you own the asset at the end of the repayment term. For firms with restricted cash flow, a leasing agreement reduces the initial outlay. Whatever the right solution for your business, you can make savings on the cost of repeat plant and equipment hire. In addition, new machinery is cheaper to service and maintain.
If your business has a less-than-perfect credit history, asset financing solutions could offer the flexibility you need. Of course, all lenders have their own criteria. However, a commercial finance broker takes a more flexible approach to your business needs by looking at how you operate and your hard and soft asset needs, adjusting repayments to suit, and so source a lender who meets your requirements.
Another benefit of asset financing is that you won’t need to secure the loan against other assets. Instead, the equipment itself acts as security for your loan, allowing you to upgrade even when borrowing would otherwise be challenging.
Asset financing could be an ideal way to make the most of your capital allowances. These Annual Investment Allowances let your business make financial reductions during the financial year, reducing your Corporation Tax bill. It’s a good idea to plan how to utilise this allowance before the end of the tax year so you can maximise the tax benefit.
Asset financing can be used to offset some of the cost of machinery and equipment against your tax bill. A specialist broker, together with your accountant, will offer the business support you need to leverage your capital allowances and boost your growth plans.
Better for business
If a traditional bank loan isn’t suitable for your business, you might be tempted to consider alternative funding. But the problem with solutions like P2P (peer-to-peer) lending is that investors are solely looking for a return. A specialised finance broker will take the time to understand your business and establish a relationship based on trust. As a result, they’ll find the right financing options for your business, with the expertise to offer help and support when required.
Funding Round for asset financing
At Funding Round, we’re financing the businesses of tomorrow. As business finance brokers, we’ll work with you to find the ideal short and long-term financing options to help you realise your growth plans.
Our services include asset financing and business support, so you can rely on Funding Round to deliver the right solutions for your business.
We’re more than just a broker, so contact us today to arrange your free consultation.