Almost all businesses require some form of finance at some point to secure their operations. However, finding the right type of finance can be tricky. With so many different options out there, it can be tough knowing which one is right for your business.
One type of finance that has been on the rise since last year, is asset finance. Here, we’ll look at what asset finance is and why deals are increasing in the coming year.
What Is Asset Finance?
Asset finance provides a lump sum secured on the company’s assets. This includes equipment, inventory or accounts receivable. The assets are basically used as collateral in case the borrower fails to make repayments.
So, asset finance is basically a loan which uses your assets as collateral. Reputable lenders such as Nucleus Services offer this and many other tailor-made business financing options.
The Benefits
When deciding whether asset finance is right for your business, it’s worth looking at the pros and cons. The main benefits of this type of solution include:
• It can release capital tied up in assets
• Lower fixed repayments
• Additional lines of credit
Your assets could be worth thousands of pounds which you can receive in a lump sum. This type of finance also usually offers lower fixed repayments. As the funds are secured, lenders will typically provide much more competitive interest rates compared to standard loans.
You’ll also have access to additional lines of credit. It can be used alongside other finance solutions. It also won’t impact any current financing solutions you already have.
Of course, there are downsides to be aware of too. For example, you’ll need to own the assets, rather than lease them. You may also need to pay a deposit in advance. However, the advantages tend to outweigh the potential downsides; especially for businesses which require affordable finance quickly.
Why Are Asset Finance Deals Increasing This Year?
Asset finance deals are increasing in popularity this year, largely due to the ongoing Covid-19 pandemic. While the government have provided unprecedented levels of financial aid for businesses, many have been unable to get the help they need. This has left them turning to business loans and asset finance as alternatives.
Compared to other finance options, asset finance is often more affordable. You can borrow small, as well as larger sums and opt for a line of credit instead of a loan. If you’re looking for a flexible finance solution, asset finance could be the best option.
