Asset Finance Loans

What is Asset Finance?

Asset finance uses business assets as a way to secure finance to help established companies to fund big projects or cover a surge in growth. Asset finance relates to loans that are granted based on the value of the assets offered as security by a business.

This type of funding usually uses assets such as equipment and machinery to secure the loan, but ‘soft assets’ such as medical equipment or IT software can also be used. The amount of money a business can borrow will be assessed on affordability and asset type.

For example, if you run a printing business and want to scale up operations by purchasing a new printer, but you don’t have the money immediately available to make the purchase, you can take out an asset finance agreement to purchase the kit.

Why choose asset funding?

Asset finance allows SMEs to acquire much needed capital to help expand and grow the business without affecting cash flow. Asset finance also allows companies to release much needed capital from already-owned equipment or machinery.

There are several reasons why this type of borrowing can be beneficial, with the fact it provides fast access to funds at the top of the list. Due to the fact the loan is secured against collateral, you have a higher chance of your application being approved if you have assets to secure the loan against, and this can really speed up the process. If you need to invest in new equipment quickly or if you need a cash injection rapidly, asset finance is an efficient method.

Another reason to choose asset finance is that it can often work out to be a cheaper form of business finance overall. Asset finance rates are fixed which makes monthly payments predictable and more affordable in the long-run, allowing you to aid your cash flow and keep things ticking over smoothly.

Key features of asset finance

• Suitability: Businesses looking to purchase any asset without the need for upfront capital. We can also look into refinancing any existing assets.
• Purpose: Used to either lease or purchase an asset.
• Amount: Loans ranging from £1k – £2m, subject to the type of asset and affordability.
• Term: Up to 7 years, depending on the type of asset and credit worthiness of the business.
• Cost: Variable, depending on the asset.
• Security: The asset will be secured until a full repayment has been made. Some lenders may also ask for a personal guarantee.
• Speed: Applications can be processed within 24 hours from receiving a full proposal.

How asset finance works: What can you finance?

There are two types of assets that a business can finance: hard and soft assets. An important factor to consider when it comes to deciding whether an asset is hard or soft is its resale value. Hard assets still have value if they are used, whereas soft assets typically have a low resale value.

• Hard assets: These are typically machines such as agricultural machinery, vehicles, or manufacturing equipment.
• Soft assets: These assets can be catering equipment, gymnasium equipment, medical equipment, or IT software.

While we can finance all sorts of assets for almost any business, most lenders will have a preference over what they can finance.

Asset finance products

The asset finance product you choose for your business will depend on whether you are looking to own, rent or release cash tied up in already owned assets. We can help you make the right decision.

Hire Purchase

Spread the cost of purchasing an asset over a set amount of time. Once you’ve paid the lender in full, the asset is yours to keep.

Equipment Leasing

Lenders buy the asset and you pay a monthly fee to rent it. At the end of the agreed term, you can extend the lease, pay the remaining balance to buy it, upgrade to a new model or return the asset back to the lender.

Asset Refinance

Release cash into your business using your existing assets. Can be used to consolidate debt or provide security when structuring a deal. Lenders will typically lend up to 80% of your asset’s value.

Asset funding eligibility: Who is asset finance for?

Asset finance is generally a short-term funding solution for businesses who either need to purchase some equipment or machinery or that wish to release cash by using existing assets.

As with most types of borrowing, the better your credit history is, the better your chances of acceptance are, especially if you want to go down the hire purchase route. Lenders will generally be looking to see if you can afford the repayments laid out in your terms, as well as what the risk of lending to you is.

Most businesses with a turnover exceeding £10,000 will be able to apply for asset finance, but if you’re unsure which option best suits your needs, don’t hesitate to contact our team.

Asset Finance Solutions with Aurora Capital

We’ve spent years building up solid relationships with trusted lenders, putting you in a comfortable position when it comes to applying for asset finance for your business. As we’ve spent time getting to know our lenders, we’ll also be able to help you get competitive rates.