Maximising cash availability for your business.
What is Asset Finance?
Asset finance, also known as Asset-based Lending (ABL) uses business assets as a way to secure finance to help established companies to fund big projects or cover a surge in growth. Asset-based lending relates to loans that are granted based on the value of the assets offered as security. This type of funding usually uses quickly-moving assets like outstanding invoices and inventory to secure the loan. However, assets can also include equipment, machinery and commercial property.
ABL finance provides funds quickly, making it ideal for times when your business needs an immediate or rapid cash boost. The amount of funds you can borrow is typically 75-85% of the value of assets you have pledged. However, this can differ depending on the lender.
Why choose Asset-based Lending?
Waiting for balances to clear can be time consuming and can leave your business short of vital cash. Using asset backed lending, you can release this cash to help the everyday running of the business or to help with a big project or expansion.
Corporations and large companies often recognise their biggest asset on their balance sheet is debtor balances. Being owed large sums of money can leave your business at a loss for weeks on end while you wait for the balance to clear. This can end up having a negative impact on your company and can be restrictive for development.
Asset based finance is designed to ease this stress by providing funds based on your business balance sheet, including inventory, debtors and physical assets.
What are the benefits of Asset-Based Lending?
This type of lending is becoming more popular in the UK for many reasons:
- Funds are available quickly
- Often more flexible than other loan styles and less restrictions on how it’s spent
- Improves cash flow by leveraging the worth of untouched assets
- Allows you to borrow against assets that traditional lenders don’t usually consider
- Keeps your finances in one place
- Protection against debtors who fail to pay is available
Risks associated with Asset-based Lending
As with all types of lending, there are some things to consider when deciding whether asset backed finance is right for you.
- A credit check is usually a mandatory part of the application process. This will show on your credit report and can affect your credit rating
- As with all lending options, defaulting on payments can result in excess charges
- As a last resort, asset-based lenders may seize the assets if payments are defaulted
Am I eligible for Asset Finance?
Providing you are a large business and have a well-kept record of payments and invoices, it should be quite simple for you to obtain asset-based loan. This type of loan can be particularly useful for businesses that have extremely busy key seasons, including at Christmas. However, small businesses may struggle to find an asset-based lender who will provide funding. If you’re a smaller business looking to secure funding against assets, consider a secured business loaner invoice financing instead.
As most lenders in this field will generally only consider very large loan amounts, there tend to be fewer asset-based lenders on the market. Therefore, they tend to take a more personalised approach to the lending process. This means you can find a lending option that is ideal for you and your business, ensuring you gain the funds you need to enhance your business and complete your desired developments.
Finding an Asset backed funding solution 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. By using our service you can be assured that you’ll receive a genuine offer with no catch no fuss and plenty of benefits. As we’ve spent time getting to know our lenders, we’ll also be able to help you get competitive rates.
Choosing the right finance solution for your business can be difficult, so speaking to us can help simplify the process. This means you can spend your time running your business rather than researching and applying for funding. If you require any more information or would like more details on our Asset-based Finance options, call us today on 01371 870 815.