Asset finance is the number 1 choice for business finance. It is an agreement that enables a business to purchase an asset which helps with improving business efficiency, manufacturing more products or fulfilling growth plans.
There are often a number of questions asked of asset finance, so we are sharing some of the most common ones which we get asked.
What is asset finance?
Asset finance allows a business to purchase an item which can be considered as a business asset and can boost performance to assist with business growth.
How does asset finance work?
Asset finance is a secured agreement where funding to fulfil growth plans is secured against a business asset. An asset is used as the security for business finance, a company receives the funding they are looking for and then make repayments over an agreed term, if problems are experienced with making repayments, then the asset used to secure the funding will be at risk.
What types of asset finance are there?
Generally speaking, asset finance is broken down in to 2 areas. Hire purchase which allows the purchase of an asset which is paid for over an agreed period of time or finance lease which means the item is leased for a set period of time.
What assets can be financed?
It is a highly flexible type of funding which can be used to invest in manufacturing equipment, commercial vehicles, agricultural equipment, construction equipment, catering equipment, distillery equipment, IT equipment, intellectual property and recycling machinery.
Follow this link to view some of the unusual requests of asset finance
Does asset finance only apply to new equipment?
No, you can also purchase second hand or used items. The only caveat being that the assets must be reliable and fit for purpose.
How long does an agreement last?
Every agreement is bespoke and can be tailored to the specific needs of a business, there is no set timescale. A typical agreement would be between 36 and 60 months.
What is required with an application?
Lenders will want details on financial history, an update on how the business is currently performing, details on any outstanding funding agreements and a credit report.
What happens at the end of an agreement?
All agreements will run for a set time. Any lender or finance broker will be in contact prior to this ending to see what needs to happen next. The agreement could simply end and the asset returned, the asset could be outright purchased or a new deal can be agreed for a new piece of equipment or machinery.
Should you have any questions or would like to know more about asset finance please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.
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