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Asset Finance for Business
CBS Finance specialise in obtaining asset finance for business. Asset finance is a lending stream opportunity that utilises existing business assets such as machinery, equipment and vehicles to access finance. Asset finance can be used to buy additional assets as well as lending against current business assets in order to generate the funding to acquire more assets that the business may require.
An asset is classified as any piece of plant or machinery that the business owns or needs for their business. For example, industrial printers may be needed for a printing company, or vans for a delivery and logistics business. Asset finance is a great way to release funds by borrowing on existing assets in order to generate the funds to buy new essential assets. Asset finance can be used for both new and used equipment and vehicles for the business.
Types of Asset Finance
Asset finance is a broad description of a number of finance products that act to help a business to acquire essential plant, machinery and vehicles. The different forms of asset finance include:
Hire Purchase Asset Finance
Hire purchase allows a business to spread the cost of the asset over a period of time at an agreed monthly repayment, with the option to purchase the asset outright at the end of the term.
Refinance Asset Finance
Refinancing, or capital release as it is often referred to is a fast and efficient way to release equity from your current assets and use the equity to acquire other essential assets. Plant or machinery on your balance sheet that is paid for can be used to raise finance for other requirements. This also applies in some occasions to assets that are currently under a finance agreement.
A finance lease agreement effectively lets your business use the asset without the need to buy it outright. You pay the lender a monthly agreed payment which will cover the full cost of the asset at the end of the term. At this stage you then have the option to purchase the asset from the lender. You also have the option to sell the asset and retain a portion of the income. Benefits include a low initial outlay and fast access to the asset without the requirement for a large up-front payment. Monthly rentals can also be offset against pre-tax profits and the VAT on the rentals can be reclaimed.
An operating lease is very similar to a finance lease with the main difference being that an operating lease allows you to rent the asset just while you need it. The result is that you pay a reduced monthly rental because the cost is based on the asset having a higher residual value when the asset is disposed of. You have full use of the asset for as long as you need it but the disposal and sale of the asset is not your responsibility.
CBS Finance have significant experience in assisting clients with obtaining Asset Finance and can offer guidance as to which is the most appropriate option for your unique business. Get in touch for a no obligation discussion with one of our Asset Finance specialists.
Glossary of Terms
Asset Finance Information Form