The term 'asset finance' is one that relates to a vast array of different financial solutions, including equipment leasing, hire purchase and asset refinance, to name a few. Even the term 'asset' can have many meanings depending on your business sector.
At MyInfinity Finance we know the difference that asset finance can make, to not only your cash-flow but to your businesses growth. When looking for asset finance it is important to choose a broker that understands the different options depending on your creditworthiness, business sector and end goal.
We understand that a manufacturing business looking to purchase a £2 million-pound machine will have very different requirements to a bakery business looking to finance a £20k industrial mixer.
Asset finance can be used to purchase new equipment or to raise cash from existing assets. Both can be achieved via following:
Businesses need cash to operate, and equipment can generally be expensive. Asset finance allows a business to make a large purchase and spread the costs over time.
This is a type of asset finance that also allows you to spread the cost of purchasing an asset over time. You will legally own the asset once all the repayments have been made.
Hire purchase is similar to a finance lease but a little less flexible, as you don't rent the asset. Instead you purchase it and pay it off in instalments. Lenders normally require a deposit and ask that all the VAT is paid upfront, not over the term of the agreement.
Although asset ownership is attractive to many of our clients, it may not be the best option for your business. We would always ask you to consider:
Is the asset needed in the long or short-term?
If you only need the asset for a relatively short amount of time then hire purchase may be the best option; a finance or operating lease might be better suited. If you intend to keep the asset for the foreseeable future, then hire purchase is perfect.
How quickly will the asset become "out of date"?
For example, new models of gym equipment, tend to come on the market at a surprising speed. If this is true of your assets then, hire purchase won't be suitable. If you are buying a machine that will be installed and run for a long time with only minor upgrades and maintenance, then hire purchase would be a good option.
What is the asset's deprecation speed?
Similarly to the question above, if the asset will depreciate quickly and have a zero net book value in a relatively short amount of time then hire purchase would not be recommended. If the asset isn't likely to wear out within 5 years, then hire purchase would be a good option.
What about accounts?
There are various entries and disclosures that you need to make in your annual accounts when taking on a hire purchase agreement. Our in-house accountants would be happy to discuss these should you wish. Please note, that we are unable to offer advice in relation to tax.
If you would like to find out more information or apply for hire purchase, please use the callback form and an Account Manager will contact you to discuss your options.
Why choose us?
We are fully authorised and regulated by the FCA
We charge no up front fees
A lease is where the customer rents an asset from the lender for a period that is a fraction of the asset's useful life.
Because you are renting the asset from the lender you don't get the benefit of owning the asset, meaning you can't account for it as a fixed asset. However, you can charge the rental payments as an expense in your profit and loss.
What the benefits of an operating lease?
You can normally include a maintenance agreement in the monthly payments
They offer tax benefits that other forms of asset finance don't
Due to the short lease terms you can upgrade the equipment regularly
What do I need to consider?
Leases do not fit every situation. The following list shows when an operating lease should not be considered:
In these cases you should consider another form of asset finance, such as finance leases.
If you would like to find out more information or apply for a operating lease please use the callback form and an Account Manager will contact you to discuss your options.
A finance lease gives you the option to rent an asset for most of its useful life.
This type of lease allows the customer to rent the asset and make monthly payments that add up to the full cost of the asset, also including the interest.
It is generally timed so the asset is at the end of its useful life when the lease period ends, this allows one of three options to the customer:
A finance lease is beneficial because you can spread the VAT costs over the monthly payments. It is also a good option if any of the following applies to you:
If you would like to find out more information or apply for a finance lease, please use the callback form and an Account Manager will contact you to discuss your options.
Did you know you can raise finance against fixed assets to give your business a cash injection?
This can be achieved by either using a current asset as security or refinancing an asset to release additional funds.
Using an asset to raise finance
Raising finance against an asset can be a good way to unlock cash tied up in it without having to secure the loan against your business or property. With this method of finance you use your owned asset as security, meaning you can take a loan based on the value of the asset.
This type of finance is generally seen as a lower risk to lenders as they have security over the asset with helps them in the unlikely event of your business failing to keep up with its repayment. Because of this level of security the product is well suited for a business that has bad credit and has been declined for other financial products.
What type of assets can I use?
Technically, an asset that is worth more than the loan amount you are looking for.
This can range from property, plant and machinery, vehicles and luxury items.
If you would like to find out more information or apply for asset refinance, please use the callback form and an Account Manager will contact you to discuss your options.
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