How your assets and equipment could finance business growth

Over time, many businesses find that their capital has become tied to their assets and equipment. Releasing the equity within these assets is therefore a great way to free up much needed funds, which can then be reinvested into the business in different ways. The simplest and easiest way for businesses to free up this capital is through asset and equipment refinancing.

Similar to re-mortgaging a house, equipment refinancing involves an asset management firm either buying your equipment and then leasing it back to you, or if you have yet to buy it outright, paying off your original loan and then offering you a new loan with lower and more affordable interest rates and payments instead. This financial model is especially useful for companies that have a lot of expensive equipment, whether it is medical, agricultural or IT related. Whatever the asset, equipment refinancing could really help you to build the funds you need to expand your business.

Here are our top five reasons for making use of this financial model.

It’s a great way to inject capital into your business 

 

1. If you own your assets outright, refinancing them can be a great way to inject a large lump sum into your business. And, as the monthly repayments are kept low you’ll be able to reinvest this money back into your company’s continued growth.

• It can reduce monthly repayments 

 

1. When you refinance your assets, they’ll be sold back to you at a lower monthly rate and with reduced interest, as when an asset is refinanced the figure is based on the market cost minus 30%. This will then allow you to use the money that you are save in other areas of your business.

• You can continue to use the asset after it has been refinanced 

 

1. Refinancing your equipment will not affect your use of the asset, and you will be able to carry on using it throughout the process. This means that man-hours will not be lost, and productivity and service levels will not be affected.

• The capital raised can be used to buy other assets or equipment 

 

1. The capital that you raise from the sale and leaseback of your assets to a refinancing company or through reducing your monthly payments, can then be put towards purchasing other vital equipment or marketing efforts to build your organisation.

• The money you save can be used for anything To find out more about equipment and asset refinancing, take a look through our site, or call us on 0844 740 7747.

 

The money that you save through refinancing doesn’t have to be used for purchasing new equipment though, it could also be used to pay staff wages, rent office space or to buy new services; the options are endless, and yours to decide upon.

How your assets and equipment could finance business growth

Reasons to use Asset Finance and Leasing

Asset finance and leasing is an excellent way to boost your company’s competitive edge by cheaply providing you with access to the resources and equipment that you need to grow your business. Whether you’re an SME or a long established firm, this can offer your organisation real benefits.

 

Buying equipment or assets for your business can be prohibitively expensive, but it’s not just the cost of purchase that needs to be considered, there’s also the cost of depreciation on your balance sheet to consider. This is a simple and thrifty solution that ensures you can always have the very best vehicles, kitchen appliances, computers, mobile devices or anything else that your business needs, with far fewer of the risks and costs of ownership.

 

Here are our top 5 reasons to use asset finance and leasing.

 

• Lack of Debt 

 

1. Making use of asset financing can help you to keep your other financial options open. As operating leases, which are used to acquire assets or equipment on a short to medium term basis, are classed as an expense. Therefore, using asset financing will not affect your credit rating, leaving you the room to borrow money from other sources if and when you need to.

• Stronger Cash Flow  

 

1. Leases are a great way to free up your company’s cash flow and help keep your monthly costs under control. As most operating leases allow you to pay via small and regular monthly payments, you’ll be able to invest the money you save back into your business and the services that you really need.

• Clear Budget Management  

 

1. With fixed monthly fees for a period of time that has been clearly defined from the outset, asset finance and leasing will ensure that your company’s budget management is far more straightforward, freeing up precious time for other projects.

• Tax Benefits 

 

1. Using asset finance and leasing is an excellent way to reap tax benefits. As lease payments are defined as expenses by HMRC, it is possible to use untaxed money to pay for them, which will save you money in the long term.

• Lease Specific Bonuses

 

1. When you are negotiating a lease with a company, it is important to remember that it is possible for lease specific bonuses to be written into the contract. If you’re leasing equipment that requires regular servicing in order to operate at its best, make sure that equipment servicing is included in the lease. Variable monthly payments are also available with some packages and are a great option for businesses whose cash flow fluctuates.

Reasons to use Asset Finance and Leasing