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What is Asset Finance?

What is Asset Finance?

Asset finance is one of the fastest growing alternative funding solutions for UK businesses. Asset finance involves using a company’s balance sheet assets, such as vehicles and equipment, as security to borrow money.

Asset finance can be a great solution to help businesses secure important funds for growth, purchasing equipment and take pressure off their cashflow.

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How does Asset Finance work?

There are a variety of different models of asset finance available in the UK.

They are all slightly different, and that is why it’s important to seek advice from one of our trusted finance experts before deciding which type of asset finance is right for you.

Four Common Types of Asset Finance Include:

Hire Purchase

Hire Purchase

Hire purchase allows businesses to purchase new assets in a series of affordable instalments. The business owns the asset once the final payment is made. It’s important to note that businesses are responsible for the maintenance and upkeep of any assets bought on hire purchase – even before they fully own it.  
Finance Lease

Finance Lease

A finance lease is when a leasing firm purchases an asset on your behalf and rents it out to you. Your business makes regular monthly payments until the cost of the asset is covered. At the end of the rental period, you can often choose to take out a second rental term, return the asset, or sell it and keep an agreed percentage of the profits. It’s important to note that your business never actually owns the asset but will still be responsible for upkeep and maintenance.
Operating Lease

Operating Lease

If your business only wants a piece of equipment for a short period of time, an operating lease might be a more cost-effective solution than other forms of asset finance. There’s no long-term commitment, and you can end your agreement when your business no longer has the need for the asset. The company that leases the item to you is responsible for upkeep and maintenance, not you.
Asset Refinance

Asset Refinance

If you have existing assets in your business, you may be able to leverage them to access capital. With asset refinancing, a business can access cash from assets your business already owns, such as equipment, vehicles, or commercial property. Asset refinance can help businesses receive an injection of funding and repay it through affordable monthly payments over an agreed period of time.

What are the benefits of Asset Finance?

  • Flexibility
  • Quick and simple process
  • Fixed repayments and interest rates make it more manageable to budget
  • Avoids using vital funds to make purchases allowing this to be used elsewhere
  • They have lower interest rates to traditional methods of lending (such as bank loans and overdrafts) making them a good alternative for funding

Meet our Asset Finance Experts

Yorvik Business Finance Logo The Directors Choice

Yorvik Business Finance

We have one simple goal - to help as many UK-based SMEs with access to funding as possible.
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Ultimate Finance - The Directors Choice

Ultimate Finance

We're a specialist asset-based lender who does things a little differently, providing invoice, asset and bridging finance solutions.
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Cynergy Business Finance

Cynergy Business Finance

Our team is focused on relationship driven lending to make quick decisions you can rely on.
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Find Asset Finance for your business

Asset finance can be a valuable way for your business to secure important funds in a way that is affordable and flexible for your business.

Your business is unique and so are asset finance lenders. Each asset finance provider is different, so it is important to understand which one is right for your business. We have a panel of experienced asset finance experts who are qualified to offer you the asset finance advice you need.

It’s also important to understand that if repayments aren’t made, there is a risk of losing important assets that are critical to the running of your business.

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FAQs

  • Depending on the type of asset finance you choose, asset finance can be used for a vital cash injection, staff wages, paying suppliers, or purchasing assets.

  • Asset finance can be an ideal way for start-ups and growing businesses to easily increase working capital.

    If you’re a start-up and don’t have an established trading history, you can use asset as collateral to secure funding.

  • This varies from lender to lender and is also influenced by the financial history of your business and the type of asset finance you choose.

    There are lenders in the market that help businesses secure asset finance ranging from £1,000 to £10 million. Speak to one of our experienced lenders or brokers for financial advice.

  • This really depends on the credit score of your business, the value of the assets and the lender you choose. Just speak to one of our trusted finance partners who can help you find the right solution for your needs.

  • Usually, the length of any finance agreement can vary depending on your agreement, lender and circumstances of the loan. In general, the term tends to be between 1 to 7 years, but this may be shortened or lengthened dependent on your lender.

    • Asset finance is a form of secured loan. If you default on your payments, the lender may seize the asset. This could harm your business if the equipment is important to your day-to-day operations.
    • Asset finance is generally not effective when looking for a short-term loan
    • Depending on the type of asset finance, you may need to make a deposit or pay the first month upfront
    • You may be responsible for maintaining the asset in question whilst under your care and setting up a suitable insurance policy - depending on the type of asset finance you choose

  • As a business owner, it can sometimes be difficult to find support and guidance you can trust.

    THEDIRECTORSCHOICE.COM brings a panel of trusted business finance experts together in one place and helps you find the perfect match for your business needs.

    Get in touch with our experienced lenders and brokers to find out if they are the right fit for your business, and if asset finance is right for you.