Asset Refinance could be the answer… because Asset Refinance is a very effective way for businesses to free up the cash tied up in their existing business assets.
Asset Refinance, what’s that?
Asset Refinance is a secured business finance solution that’s also part of the Asset Finance range of products, and it’s not to be confused with debt consolidation or anything like that, which is a separate form of funding.
You can refinance single or multiple assets, and you don’t even have to own the asset outright. Lenders can often offer refinancing arrangements on the equity tied up in assets like property for example.
When applying, lenders will generally need to know what the asset is and how it’s used. They will also need to know how much it’s worth, which can be done on desktop valuation or with a qualified surveyor inspecting and valuing the asset in question.
When you receive your funds, you are temporarily transferring ownership of the asset to the lender, but you’ll still be able to use the asset for your business without interruption. When you’ve fully repaid the finance then ownership will be transferred back to your business. However, because Asset Refinance is a secured facility, the asset concerned is at risk should the business become unable to repay the finance agreement.
Asset Refinance is effectively a secured loan repaid using Fixed Monthly Repayments over an agreed period, or term, that can be as long as 5 years, until the agreement has been fully repaid including interest.
Common assets that can be suitable for Asset Refinance include:
- Property - This includes commercial, industrial and residential property assets.
- Vehicles - both new and used.
- Plant & Machinery - This includes everything from construction equipment to manufacturing machinery, printing presses and everything in-between.
- Stock /Inventory - Includes raw materials, finished goods, or even work in progress.
The benefits of using Asset Refinance
Invest in your business - Use the funds generated to smooth out cash flow, drive expansion and acquisitions.
Budget with confidence - Asset refinancing can give you longer to repay your loan, and fixed, affordable payments make planning straightforward.
Flexibility - Lenders can structure asset-backed loans in many different ways to meet a borrower's specific needs.
The ‘Need to Know’ for Asset Refinance
Fees - Asset refinancing is not without its risks, as you may have to pay set-up fees and re-purchase costs when you refinance an asset, so it is important to make sure you know exactly what all the lenders’ fees are and that the benefits of refinancing outweigh the costs.
Terms of Lending - Always read the lending agreement so that you are sure you know what you are getting and the terms you’re signing up for will work for your business. This can include things like what date in the month a lender needs to see your management accounts by, or how regularly they may need to inspect the asset.
Collateral - The lender buys your asset from you and uses it as collateral. In a worst-case scenario and the business defaults on payment, the lender could repossess the asset. This results in losing the use and ownership of the asset entirely, which is something to weigh up, as the loss of the asset may not be worth the extra cash it affords you.
How can our Banking & Finance Team help?
It can be a demanding task sourcing the most appropriate finance solution for your business, let alone acquiring the correct levels of funding necessary, you need to know that asset refinance is right for your business.
So, if your business has assets and you’re looking to explore Asset Refinance speak to our team of finance experts who can give you some guidance on what the options could look like.
