Asset finance enables a business to secure lending for working capital, using the assets owned by the business as the security to enable the funding to be provided. A typical business loan application process can be quite in-depth and require lots of business planning and projections. An asset finance application however is typically a much less complicated and quicker process due to the fact the business assets act as the security for the finance deal.
A business will normally use asset finance as a borrowing solution. Items such as inventory, stock, machinery, buildings, warehousing and accounts receivable are some of the most common business assets that can be used. In terms of its use, often this will be for purchasing new equipment, buying stock and paying staff. In essence the funding can boost any cash flow shortfall that a business might be experiencing.
Something that is not often associated with asset finance is for it to be utilised simply to keep a healthy bank balance. If we look at the time of writing this, many companies are approaching the end of their financial year. They will be looking at how they can fund business growth initiatives for the coming year and having strong cash reserves will help to facilitate this. By leveraging the asset of a business for an increase in financial security you can also benefit from positive interest rates and better capital allowances. Asset finance is an excellent solution to give your business a cash reserve safety net.
Another major positive with asset finance is that you can continue to make use of unsecured funding opportunities. Leveraging assets can be seen as a positive move and if additional funding is then required in the future, there are plenty of opportunities available via the unsecured funding route.
If you have any questions or would like to discuss any aspect of asset finance, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.
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