As a business owner, any significant expenditure will always be an anxiety-inducing decision to make. Thankfully, there is a wide range of financing options available to you, one of which is asset financing.
What is asset financing?
Asset finance is the process of using balance sheet assets such as inventory, investments and account payables as collateral in order to obtain a loan. This finance technique is most commonly used to help shore up working capital, either to pay wages or purchase necessary equipment while existing funds are still inadequate. As a result, this type of financing is most often used by businesses that need to make large purchases to run their trade, often on short notice or when requiring a swift turnaround.
Some of the benefits usually cited for asset financing include the reduced upfront payment, as the payment will instead be done in set instalments. This brings other benefits such as improved cash flow from these smaller, spread out payments as well as avoiding the effects of deprecation and damage as the business using the assets does not shoulder these losses in value. These advantages accumulate and prove asset finance to be a more flexible and accessible alternative to traditional bank loans.
However, as with all finance options, asset finance has its disadvantages. If the loan was obtained by offering up inventory as collateral but the business fails to fulfil the routine payments, they may lose assets essential to the running of their business. Furthermore, asset finance may not be suitable for businesses that wish to own their assets outright.
Asset financing – where to find out more
In conclusion, asset financing could very well be a natural fit for your company’s purposes if you need to make expensive purchases within a short period of time but lack the finances to do so. As proven by our successful work with Sara Louise Kakes Ltd and Dufort Associates Ltd, Tower has the expertise, resources and contacts that allow us to facilitate your asset financing needs. Contact us for more information or browse our website for other alternative financing services.