Asset Finance

Asset Finance – Exploring the Diversity of Lenders

Every business experiences cash flow problems in its lifetime. For small and new businesses, it quite often happens early in their lifetime. Established businesses will occasionally experience problems with liquid cash.

This is not necessarily a reflection on the financial health of the business. Rather, it reflects the economy surrounding the business. There are multiple reasons why asset finance may be the best option. When there are healthy assets to secure a loan quickly this may be ideal.

There may be a merger, or a company may need to finalise an acquisition quickly. Asset finance may then be the best available option. Lenders are less likely to falter when a loan is secured on strong assets and asset finance can be made available quickly. Loans provided as asset finance also have lower interest rates because the risk of loss is substantially reduced. They offer a secured risk, whereas an unsecured loan will cost more.

Asset Finance and Borrowing Costs

The cost of issuing shares or bonds can be prohibitively expensive and take longer. Raising funds through the securities market is also difficult, especially if time is a core factor.

Additionally, asset finance is secured on assets that have not been secured elsewhere. If they have been, usually the other lender will have to agree to subordination. This is often not a quick option and therefore why secured asset finance is easier to obtain.

Finding Asset Finance Lenders

A simple Google search returns list upon list of lenders that may be willing to explore and offer asset-based finance for you. Rather than simply approach each lender individually, it is best to use a broker and financial specialist to do this for you. Brokers have special relationships with their regular providers and they are also likely to negotiate better terms and rates for you.

There may appear to be a sea of funding resources out there. Remember this. Every lender is different as is every borrower. Some lenders will only provide finance for businesses in certain sectors. Assets may seem ethereal to some lenders, especially when it comes to tech companies with software assets.

Different Types of Asset Finance

Asset finance can also involve seeking funding for specific assets. There are more lenders available for this type of asset finance. Companies may want to fund new vehicles, manufacturing equipment, or even increase their tech footprint. Lenders secure the loan against the asset. In some cases, they will provide a lease agreement for a set period of time and provide the lease for the company after they have funded the acquisition of the asset.

Renewable energy and aircraft are popular new acquisitions that can be funded against current assets. Healthcare equipment and the agricultural sector can access asset finance too. It all boils down to finding the right lender.

Brexit fears have not affected the UK’s internal asset finance industry in the way that some forecasters suggested. For most in the UK, it is business as usual. There will always be business to be done, thus there will always be asset related finance made available.

This type of finance cannot be secured for startups. Lenders want to see a stable trading history. There is a clear requirement of at least two years trading to be in place before any lending can be considered. Once a business has a stable history of trading and can show consistent goodwill, asset finance should not be out of their reach.

Belgravia Property offer borrowing advice in all areas of unconventional finance and will help your business find its best asset finance opportunities. With established relationships with lenders, Belgravia is in a position to negotiate good terms and conditions as well as interest rates for you. Contact us for more information.

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Asset Finance – Exploring the Diversity of Lenders 1324

Asset Finance – Exploring the Diversity of Lenders 1324

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