It’s been a good start to the year for UK businesses. Whilst analysts are cautious about using the word ‘recovery’, there has certainly been enough growth to predict a positive outlook for the next three months and perhaps even into the second half of 2014. We’ve noticed a growth in the update of asset finance and that’s a good business barometer.
The recent figures come as a boost for businesses that have felt the effects of the recession and are looking forward to better times ahead. And if you think now is the right time to expand, you might want to learn more about asset finance before applying for other forms of funding.
What is asset finance?
Asset finance is a type of loan used to fund the tangible things you need to run or grow your business in UK. These assets could include machinery, equipment, premises or transport. It is a secure means of funding that allows you to pay for the assets in affordable monthly installments.
According to the Finance and Leasing Association (FLA), asset finance is the third most popular form of business finance, after loans and bank overdrafts, with FLA members last year providing more than £22bn of finance to businesses and the public sector.
How does asset finance work?
There are a number of types of asset finance, two of the most popular being leasing and hire purchase (HP).
Leasing gives you the use of the asset, such as an item of machinery or a car, for a set length of time. You do not own the asset although often, at the end of the contract, you are given the option of either buying it or rolling over into a new contract for an updated model. You are not usually required to pay a deposit and some lease contracts come with a repair clause should anything go wrong.
Hire purchase is a means of buying an asset by paying monthly installments for a set period of time. The interest on HP can be quite high, but finance charges are also tax deductible. At the end of the HP contract you own the asset outright, giving you the option of continuing to use it or selling it to a third party.
Is asset finance right for me?
Asset finance is right for businesses of all sizes and from many industries. You might assume that asset finance is mainly used by multi-million pound businesses running large factories or keeping fleets of vans and lorries on the road, but FLA figures show that around one in three small businesses with any external borrowing use asset finance. It is a secure form of finance for the business, as it cannot be recalled during the length of the contract, and it’s flexible.
How can I find out more about asset finance?
The team at Simply Factoring Brokers is always happy to spend time with business owners explaining the benefits of asset finance and how it differs from other forms of lending. We have strong partnerships with a number of asset finance firms and as a result can advise on which would and wouldn’t suit your particular type of business.
We can also broker asset finance deals for businesses with a chequered credit history, so if previously you’ve been turned down for asset finance, don’t assume that this will still be the case. Just call Simply Factoring Brokers on 0333 772 1558 and see how we can look after your assets!