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It’s good to understand your finance options when you’re growing your business, and what they involve.
Growing your business takes time and money. However, you might not have the cash to buy the vehicles, machinery or equipment you need.
Perhaps you want to increase the range or volume of products you offer or sell them from multiple locations. This can mean having to buy additional equipment, extra vehicles and invest in new machinery – which all adds up to a significant investment.
Asset finance can give you a flexible way to scale up quickly through monthly payments rather than paying for it all upfront.
Whatever growing your business looks like to you, asset finance can be a great way to invest in its future.
Asset finance is a way to borrow money to cover the costs of buying new assets for your business. This could include financing machinery, equipment and vehicles.
Asset finance allows you to pay a deposit and borrow the rest. You can repay this back in monthly instalments (including interest) over a set period of time. You can then pay an option to purchase fee at the end to transfer ownership of the asset to you.
By borrowing money, you’ll avoid paying out a large sum in one go and tying up all your working capital. It also simplifies cash flow as you can include fixed monthly payments in your forecasts knowing exactly how much they’ll be.
Assets are any item of value your business owns. The types of assets you need to grow your business will depend on the sector you operate in. You might want to use asset finance for assets such as:
There are different asset finance options depending on what’s right for you and your business.
With Hire Purchase, the lender purchases your assets and you lease them – making regular monthly payments over a set period of time. Once you have paid off the cost of the asset and the interest, you can pay a purchase fee to own it outright.
With a Finance Lease, the lender purchases your assets for you and then leases them back to your business. At the end of the agreement, you can select to extend it or sell the asset and receive a share of any surplus proceeds. Like Hire Purchase, this may be offered on things like equipment and vehicles.
Vehicle Contract Hire can be a cost-effective way to lease cars and vans. You pay an initial sum, followed by monthly amounts. At the end of the rental period, you can select to extend it or return the vehicle.
Asset refinancing – or Sale and Hire Purchase Back – can help release funds back into your business. If you have recently purchased an asset, the lender buys this from you and then finances it back to you under a hire purchase agreement. You make regular monthly payments and at the end of the agreed term you own the asset again.
Green Asset Finance can help you buy energy-efficient equipment or electric vehicles to grow your business and meet your sustainability targets.
It can vary from business to business. It’s important to be sure you can cover the cost of repayments, whatever type of asset finance agreement you sign up for.
You may also want to think about the following before agreeing to any terms:
Asset finance can be a simple way to fund what you need now, helping to grow your business for the future. It allows you to spread the cost of the new assets, without having to pay upfront or access other types of secured or unsecured lending.
Paying monthly helps you manage your business’s cash flow and means you’re not tying up large sums of money that could be needed elsewhere. Asset finance can also offer flexibility – particularly if you don’t want to own the assets in the long-term.
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