“I run my own company and I need to buy something to increase its productivity, but I don’t want to take too big a hit to my cashflow.”

It’s a predicament often faced by company directors and it’s one that can be resolved with asset finance.

What is asset finance?

If you’re looking to purchase something for your business without disrupting your cashflow, asset finance could be the way to do it.

Whilst there are different types of asset finance, it usually means that you will make regular payments for the use of the item (asset), rather than making one lump sum payment.

This will allow you to use the new asset to generate income whilst still paying for it.

Why is asset finance useful?

The economy has continued to improve since the crash of 2007/08, there is still a lack of knowledge around the available variety of finance for SMEs, with 90% of them getting their business loans from their main bank.

However, whilst bank loans can be fine, you might be looking to fund specific assets and could be turned away by your bank because it’s not something that they offer.

And this is where knowledge of alternative routes to finance is important.

How does it work?

Asset finance is a loan that can be used to purchase a range of items, from construction equipment and kitchenware to vehicles and engineering equipment.

Understandably, you may not want to tie up your business’s cash in its equipment, so things like a Hire Purchase (HP) will allow you to spread the cost of the asset, meaning your asset will appear on your balance sheet so you can claim writing down or annual investment allowances (AIA).

Once you’ve finished paying, you can then opt to become the owner of the piece equipment.

Alternatively, if your business isn’t flexible enough for a HP agreement or if you think that your company will outgrow the asset, there is the option of leasing.

This just means that, after you’ve paid the final instalment, you have the option to upgrade the equipment and start again, or simply return it.

It seems confusing…

Regardless of what it is that you’re looking at purchasing, our team of professionals will be able to guide you through the process of using asset finance to take your business to the next step.

Call 0115 958 6872 or email info@midlandsassetfinance.co.uk for further information.

Don’t have enough time to speak to someone?

Using our online tool, Asset Finance Compared, you can get a Decision in Principle in 60 seconds from the comfort of your own office or home.

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