Banking 101 -
How asset finance can support your business’ growth
Asset finance is a great way for businesses to stay on top of their cash flow by leasing or borrowing to purchase a wide range of assets, typically equipment that helps a business undertake its daily work and generate income.
Is asset finance right for my business?
Purchasing assets outright is not always the most efficient way to deploy capital, and asset finance provides an alternative. Asset finance, provided by our subsidiary, Renaissance Asset Finance, enables companies to purchase equipment and vehicles, either new or used, by paying the cost in instalments. Asset finance also provides an opportunity to free up money and expand capital by taking out a loan secured against existing assets.
Benefits of asset finance
Contract lengths and monthly repayment schedules designed around the business needs, based on your initial deposit and potentially a final balloon payment.
Allows businesses to spread the cost and retain cash flow for other purposes.
Option to own the asset at the end of the contract; the business has control and responsibility for the asset during its working life.
- Capital allowances
Businesses may be able to claim capital allowances when assets bought are utilised in the business by deducting some of the assets' value from your profits before you pay tax.
Types of asset finance that help businesses manage cash flow
There are a range of asset finance options, depending on individual circumstances.
Hire purchase might be right for a business looking to own the asset at the end of the hire period. It allows the business to expand or upgrade by spreading the cost of a new asset, reducing the impact on cash flow.
A finance lease allows a business to rent rather than own the asset. The asset remains the property of the finance company throughout the lease, while the business benefits from exclusive use of the asset providing the terms of the agreement and regular payments are met. Also, because it is a trading expense, the business may have the option to off-set the rentals against pre-tax profits.
Refinance – hire purchase
Refinance allows a business to raise cash from assets it already owns. A business can take finance secured against the value of the asset it pays back over an agreed period; the business will retain ownership of the asset on completion of all scheduled payments. Any asset with a future value could be suitable for refinance. A cash injection can help you invest funds where they are needed within your business.
How asset based lending can impact your business
Asset based lending (ABL) is a powerful financial solution available to help businesses achieve their growth ambitions.ABL is a flexible form of finance that businesses, specifically SMEs and mid-market corporates, can use to unlock working capital to drive both organic growth and acquisitions.
Renaissance Asset Finance are authorised and regulated by the Financial Conduct Authority. Registered in England and Wales 08885289, Arbuthnot House, 7 Wilson Street EC2M 2SN. Any lending provided will be unregulated.
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