If you’re a company that uses large, heavy equipment to make your product, you may find yourself regularly searching for ways to save the pounds when you next go to buy some equipment. One way to make life easier might be to use your current assets to help finance newer, more productive assets. The benefit of this type of finance is that you don't need to have an excellent credit rating which is ideal if you’re a new business that hasn't been trading long and has not had the chance to prove your financial clout.
What Is Asset Finance?
It works by letting you use the monetary value of your current assets. The great thing about this is that you don't need to worry about qualifying for loans or applying for rigorous credit checks because your assets are used to secure a finance package.
Once your current assets have been valued, the asset company owner uses the confirmed value as a new line of credit on which they can finance their new chosen piece of kit.
How to Get Asset Finance
Many companies will use asset-based financing to purchase new assets to use for the production of their product. Others may take advantage of several financing options such as refinancing, leasing and debt restructuring. Applying for this kind of finance is pretty simple and only requires the filing out of a few forms and docs supporting the value of the assets you’re looking to use to bring in new equipment.
A top tip is to choose the kind of finance firm that is a specialist in the type of heavy equipment you want to finance. In addition, be sure that you fully understand the terms and conditions as a few institutions will tack on charges into contracts that can cause original rates to be higher than originally agreed.
How Will Asset Based Finance Benefit Me?
Using your assets to finance new equipment offers you much flexibility. This is vital, especially if you are a start-up or cash is tighter than you’d like it to be. Because the line of credit you're dealing with is revolving, it can be used to borrow future capital for new equipment and then paid, reused, and put back into a further acquisition later.
Another benefit of this type of financing for your business is the variety of options you have for purchasing; depending on the lender, you can…
- Use the value of their assets to get business cash advances
- Finance future mergers and acquisitions
- Restructure your debt
This type of finance is perfect for companies that rely on heavy equipment but are just starting and struggling to pay for the assets vital to their success.