Asset Finance
What is Asset Finance?
Asset finance is the securing of a loan against a business’ assets.
The company borrowing the funds must provide the lender with a security interest in the assets. Similarly to Invoice finance, asset finance is used to obtain short term funds to boost a business’s cash flow in order to promote growth. Accounts receivable, inventory, machinery and even buildings can be offered as assets to secure a loan.
There are two types of loans that may be given in these circumstances. The most common kind is a secured loan, wherein a company borrows by guaranteeing an asset (such as equipment, stocks or goods) against the debt. Unsecured loans, however, do not involve assets specifically although the lender may have a general claim on the company’s assets if the loan is not repaid. Should the business go bankrupt, secured creditors normally receive a greater share of their claims; therefore secured loans typically have a lower interest rate.
The Problem
When looking to secure quick finance to aid the growth or cashflow of a company, credit history or a short lifespan of a business can severely hinder the ability to secure a loan. This is particularly common with new start ups and businesses that have not been operating for a lengthy amount of time. The one thing that all businesses do have, however, is physical or non-financial assets, and this can be the key to solving the problem.
How we can help
Once seen as the last resort in terms of financing, asset financing is fast gaining popularity, especially with smaller businesses and businesses in their infancy. This is where we can help in the short term and get your business on the road to success. If your business is asset rich, then Asset Finance is the choice for you – fast, affordable and convenient.