Asset finance for a new business is a growing business funding method to get the things your business needs, like equipment or vehicles, by paying for them over time instead of all at once. It helps you avoid the burden of a large upfront cost, making it more manageable for your business to buy and use essential assets.
Asset finance is available for any business that needs important things like equipment, vehicles, or technology to work. It doesn't matter if the business is small or big; this type of finance helps them get those assets without paying everything at once.
Evidence of being able to make finance repayments helps boost your chances of getting SME asset finance.
Instead of using a large amount of cash to buy assets outright, SME asset finance lets you spread the cost over time through manageable instalments, leaving more money in your business for day-to-day expenses and unexpected needs.
It also allows you to regularly upgrade your equipment or technology, helping you stay competitive and efficient without the burden of always having to buy new assets at full price.
Using asset finance and leasing means that you'll have to pay back the borrowed money with interest. This can add up and make the overall cost higher than buying the asset outright.
Also, until you fully pay back the loan, the asset belongs to the finance provider, and if you can't make the payments, you may risk losing it.
If you happen to agree to a long-term finance plan for an asset, it might become outdated or less useful in the future, leaving you stuck with something that doesn't meet your business needs anymore.
It's essential to have a good track record of managing debts and loans, and also be able to clearly explain what assets you want to finance and how they'll benefit your business. Lenders want to see that you're responsible with money and that the assets you're getting will be valuable for your business.
The lender would review what business assets are available and this could be that the company assets are secured by way of a debenture, plus a director’s personal guarantee to cover the loan if the business cannot repay on default.
If the business cannot repay, the loan, the lender will discuss options with the business; it would also be advisable to speak to an insolvency practitioner. If the loan is not repayable, the lender can take legal action to get repayment of the loan. This could lead to the business going into liquidation and bankruptcy of the individuals.
As the asset being funded is the effective security for asset finance loans, these types of facilities can be arranged very quickly, roughly within 1-3 weeks.
If you’re considering asset finance and leasing, get in touch with us today. One of our specialists will be able to advise you on how to get started with tailored advice for your business.
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