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What is asset finance?
Asset finance is a source of finance that is used to obtain equipment.
Most companies or organisations when investing in tangible assets, whether that be office equipment, manufacturing machinery, cars, agricultural vehicles or even aircraft, they typically need an affordable, secure means of finance.
That’s exactly what the asset finance is all about. In actual fact, after bank overdrafts and loans, asset finance is the third most popular means of borrowing for companies and becoming increasingly important to the public sector.
Why use asset finance?
Asset finance is a flexible alternative to a traditional bank loan, providing significant cash flow and tax benefits for businesses looking to purchase a new piece of equipment, a vehicle or other fixed assets.
Who uses asset finance?
Asset finance accounts for the majority of debt-financed business investment.
Around one in three small businesses that have any external borrowing use asset finance, with agricultural and manufacturing making most use of leased equipment.
Agricultural asset finance may be used to buy anything from a new tractor to asset finance on livestock. It is a great solution for this industry sector and livestock finance is certainly a niche which we have lots of experience with.
Equally asset finance for manufacturing companies is also a great solution. Although they may have different requirements to other sectors, asset finance is still hugely helpful to manufacturing. After all manufacturing equipement can be costly, so rather than using a large amount of capital, companies often finance it through a lease, with the added tax benefits that it brings.
There are of course other industry sectors which benefit from asset finance and some of the things people can finance are:
- Leasing commercial vehicles
- Leasing commercial boats
- Leasing haulage vehicles and trailors
There are of course many more, but these are a few.
Advantages to business
Asset finance is:
- A valuable alternative to conventional bank loans or other commercial finance.
- Secured wholly or largely on the asset being financed, reducing the requirement for additional collateral.
- Secure for the user, as the finance cannot be recalled during the life of the agreement.
- Sustainable because businesses have the option to replace or update equipment at the end of the lease period.
- Tax efficient as able to offset payments against profits.
Sources of Asset Finance
Asset finance can be obtained through finance brokers like us.
If you would like to know more about asset finance or have a specific requirement please complete the form below and one of our commercial team will be in touch.