Finance lease is becoming a highly popular funding solution for small businesses. It enables a business to fund a new asset, without purchasing or taking ownership of it. You set-up an agreement with a finance company, they will purchase the asset and then provide it to your business for use. You enter a leasing agreement with the lender and pay a monthly fee for the use of the item.
How does finance lease work?
A business will identify the asset that they need for their business. They will then approach a finance company to confirm their requirements and enter into a lease agreement. The finance company will then purchase the asset outright and then transfer it on to the business whilst remaining the owner. The business will keep possession of the equipment and will pay a fixed monthly fee until the end of the agreement.
At the end of the term the asset is simply handed back to the finance company. Alternatively, you can extend the deal and continue to make monthly payments, you can look to outright purchase the asset, or you can look at a new finance agreement for a brand new asset.
The key benefits include:
- No upfront costs
- Fixed monthly repayments
- A percentage of VAT costs can be reclaimed
- Flexibility at the end of the finance agreement
Finance lease is a perfect solution for anybody that wants to acquire new business assets without paying its face value from the outset. It is also an ideal solution for purchasing assets which need to be regularly updated. It offers excellent cashflow benefits and many businesses find that the extra revenue they generate as a result of the new business asset actually covers the monthly expenditure cost.
If you have any questions in relation to finance lease, then our team would be delighted to help. To find out more please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.
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