We often hear from small business owners who are unaware of their options when it comes to asset finance. This is understandable as awareness of asset finance as an alternative to bank loans is still low compared to traditional routes such as going to the bank.
Going to the bank for a business loan, however, can be a laborious process with the real possibility that you will be turned down if the bank feels your small business doesn’t fit strict criteria. Asset finance can offer an alternative in these cases if the business model is sound and your company already has assets which can be used as security.
With this in mind here are the main asset finance options:
This involves purchasing an asset and spreading the payments over a period of time. The disadvantage is it means you will end up paying more for the asset.
This involves renting a vehicle such as a van or another piece of equipment important to the business. Again the cost of the equipment can be spread over a set period, sometimes with the option to buy at the end or continue paying monthly and upgrade to the latest vehicle or piece of equipment.
This allows you to use your existing assets to raise cash. This usually comes in the form of a loan which releases equity from your asset. This is ideal if a business is rich in terms of assets but needs to protect cashflow. The downside is the lender can seize the asset if you don’t keep up the payments.