Asset finance is a lending option that allows businesses to access much-needed equipment such as machinery and vehicles, without having to pay for the assets outright. Sometimes asset finance refers to releasing equity from an existing asset, which is invested into the business.
There are different types of asset finance, including asset refinancing; hire purchase; finance leasing; equipment leasing; and operating leasing.
The general purpose of asset finance is to receive access to an asset from a company, without having to pay for the asset outright. The cost of the assets is usually spread over a period of months with the option to purchase the asset at the end of the borrowed period (depending on the asset finance type).
The second way asset finance works is that a business releases equity from an asset it already owns, which is then usually reinvested back into the company. This is sometimes used to improve cash flow into the business or as a way to grow the company.
The main use of asset finance is to help businesses access the equipment needed for their business to function day to day or as an investment to help the company grow. An asset can be anything, such as a car, machinery or equipment – whatever the business needs to function.
Asset finance can help a company to eventually own an asset, simply lease an asset, or upgrade an asset (this tends to happen if the asset is regularly updated and it does not make financial sense to buy it if it will be upgraded soon).
Businesses will apply for asset finance for a number of reasons. Asset finance allows businesses to spread the cost of high-value assets over an agreed period of time. An asset may only need to be used for one-off jobs, so it makes more economic sense to finance an asset for the short term.
Any business that needs access to assets can apply for asset finance, this includes startups, small businesses, medium businesses and even corporate companies.
Many businesses from a variety of industries utilise this form of business finance to access or purchase expensive equipment without having to make such a large impact on their cash flow or working capital.
As asset finance is a broad term, there are many flexible funding options available that are fitting to the needs of all types of businesses.
Asset finance is a broad category and covers several funding options. Each solution is different, so that is why we have explained the common forms of asset finance used by businesses.
Asset refinancing is where a business essentially releases equity from an asset it already owns, which can then be injected into a company.
Money released from the asset is determined by the value of the asset, so you would not be able to receive more money than the asset is actually worth. It works similarly to a secure loan.
Asset refinancing also works against assets that the business does not fully own. For example, if a business had purchased 50% of an asset via hire purchase, they could refinance the share of the asset they own.
Hire purchase is where the business pays for an asset in instalments over an agreed period, eventually the business owns the asset once the instalments are paid in full. Generally, you will have to pay some form of fee or deposit in addition to the VAT for the asset upfront.
Finance leasing is where you essentially borrow/rent the asset, but do not own the asset. Much like financing a car, you are responsible for much of it (such as road tax and MOT) but the car is not owned by you and there is no option to purchase.
It is very similar to hire purchase, except you do not have the option to purchase the equipment at the end of the contract.
Equipment leasing is a way of accessing expensive assets that are needed for a business to operate or grow. The equipment is leased over a period of months, allowing the business to spread the payment and not eat into the business’ cash flow. Finance leasing and hire purchase are common forms of equipment leasing.
Operating leases are the short term solution to accessing assets. Under operating leasing, the asset is leased on a short contract, typically so businesses can improve quickly in a short time period. It lets businesses upgrade the assets regularly, ensuring they have the most up to date equipment.
To apply for asset finance, you can contact JPM Capital at 01244 207276 where you can speak to one of our account managers. Our account managers are happy to answer any questions you have regarding asset finance, such as the specific asset funding you would like to apply for.
Alternatively, you can complete the contact form at the bottom of the page. Once the contact form is submitted, an accountant manager will soon be in contact to discuss your business finance application.
Generally, funding decisions for asset finance can take 24 hours to be made. The overall application will likely take between 24 – 48 hours. Our account managers always try to ensure a swift as possible process, so that our clients can access the assets they need.
Any business that uses equipment to function will understand the burden of purchasing assets to cash flow and working capital.
That is why JPM Capital has partnered with the UK’s finest asset finance lenders in order to offer a solution to almost every requirement. We can provide hire purchase agreements, business leasing, operating leasing, refinancing and vehicle leasing options for any type of equipment.
Raising finance against the equity that is locked in assets is also a useful method of capitalising upon your assets. Our specialist and experienced team can guide you through all aspects of asset finance, liaise with equipment suppliers and handle all the administrative processes involved.
In addition to asset funding, JPM Capital can broker a number of other business finance products for SMEs in the UK. All of our products can be found on the funding solutions page, and some of our most popular products can be found below:
To contact us about any of our funding options listed above, please call us at 01244 207276 or by filling out the quote form at the bottom of the page.
We recently dealt with an Accountancy firm who has suffered immediate cash-flow problems as a result of the recent unprecedented global contagion. Clients who paid monthly direct debit retainers have cancelled and debtors which have been due into the firm have requested payment terms. At a time when clients need Accountancy support more than ever it is important that our client was using his time to support clients and not chasing bills!
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