features
learn about business
finance options
quick enquiry
Asset Finance - Advice
Asset finance is a form of finance that allows a business the use of an asset without tying up its capital. It can be used by a company needing new equipment, or in trying to release the inherent value in capital items already owned – to provide cash-flow or additional working capital, for example.
Ownership of the asset being financed either remains with, or transfers to, the finance company which in turn grants right of use for a specified period. The business seeking finance then makes regular lease payments on the equipment. All forms of leasing are essentially rental agreements with the finance company.
Finance can be provided for most types of business asset for periods between six months and seven years and for amounts ranging from £5,000 to £100 million.
The details of lease agreements to provide asset finance vary, but fall into one of two basic categories:
1. With a direct lease, a company agrees the purchase of an asset from a manufacturer, distributor or existing owner and then arranges for the finance company to buy it. The lessor (i.e. the finance company) then leases the asset back to the company in need of the asset.
2. With sale & leaseback agreements, the asset already owned a business is sold to a finance company which then rents it back to the lessee (i.e. the company seeking funding).
Asset finance can be an excellent tool when used correctly – though it is essential to seek expert advice.