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An SME guide to asset finance

Running a smaller business means you’re probably no stranger to seeking finance at some stage. So consideration of the right finance options available to help unlock funding is important when you need finance to help reach future business goals.

Why asset finance can help

Asset finance is an easy way for SMEs to spread the cost of new business equipment without tying up capital or disrupting cash flow; these assets can vary from a new fleet of cars for a taxi firm to ovens and refrigerators for a catering business, or machinery for a production process.

Asset finance is, therefore, a way for SMEs considering acquiring high-value equipment (assets) to get what they need to support their continuing business growth.

With asset-based finance growing in popularity in the UK, (3% growth in SMEs using it last year), it’s vital that smaller businesses understand how it works.

Asset finance for SMEs

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The two main types of asset finance available to businesses include Hire Purchase and Finance Lease.

Hire Purchase

Hire Purchase plans offer the benefits of ownership without the initial capital outlay. The business may source a supplier for the asset or equipment and the finance provider will, in turn, purchase the item(s) and provide the asset for the business to use. The business makes regular payments with an initial deposit and the remainder of the balance and interest paid overtime. Once all payments (including an option to purchase fee) have been made at the end of the agreement, ownership of the asset transfers to the customer.

Finance lease

A Finance Lease provides you with access to assets for use in your business without the upfront costs. You select the asset and the finance company will pay for it outright. You will hire the asset paying regular rentals. You will not own the asset at the end of the Agreement.

It’s easy to be eligible

If you’re looking to apply for asset finance, you would usually need to meet eligibility criteria by showing a good credit history together with your business name, address and company registration number. You usually need to have been a British resident for three or more years and be able to provide three sets of accounts filed at Companies House.

What businesses can use asset finance

Asset finance is available to Sole Traders, Private (Ltd) companies, Partnerships, Limited Liability Partnership, Unincorporated entities, Public (PLC) companies.

Make 2020 the year for asset finance

Asset finance is growing in popularity.

Allowing SMEs to acquire assets that are vital to their business in a financially flexible way, it’s likely that asset finance will become an even more popular method of finance this year.

Want to find out more about how asset finance can help your business grow” Speak to the experts at Hitachi Capital Business Finance today.


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