Asset finance comprises of both leasing and hire purchase. Asset finance gives firms access to equipment their business needs to grow which otherwise may not be accessible due to cash flow restrictions.
Firms have immediate use of the asset however are required to pay a monthly fee over an agreed period of time and so avoid the upfront costs.
The leasing company, known as the lessor buys and owns the asset on behalf of the customer known as the lessee. The customer pays a rental for the use of the equipment over a predetermined period.
There are two main types of lease:
A Finance Lease: All rights and obligations of ownership such as maintenance and insurance are transferred to the lessee, over the agreement period the lessee will have paid back the majority cost of the asset.
An Operating Lease is used when a business does not require the asset for the entirety of its working life and the lessor will take it back at the end of the agreement period and is responsible for maintenance.
Hire Purchase, commonly abbreviated to HP, allows a company to buy the asset on credit.
The finance company purchases and owns the asset until the final payment is made. The business then makes regular payments over an agreed period until the asset has been paid off, the business is then given an option to buy the asset for a marginal sum.
Why use asset finance?
The main benefit of asset finance is that it gives your business access to new equipment that would otherwise be unattainable. Your business can then use this asset to generate revenue greater than your repayments. The other benefit is that it is flexible and can be used to fund a huge range of assets.
Finance agreements are also tailored to individual business’ needs and can be flexible. They provide excellent budgeting tools as payments are regular.
How to find asset finance
Asset finance is available to all UK SMEs, from those looking for a £50,000 loan to those looking for a £5,000,000 loan. Getting asset finance can be extremely straightforward, at GSM Finance we can have an agreement in place in as little as 24 hours. A quick internet search and you'll easily find a handful of lessors. However, trying to navigate the market yourself may prove more cumbersome. At GSM we have a broker panel of 30 different lenders that we can take your proposal to. Our 21 years of finance experience means we take it to the most suitable ones to ensure a deal. On top of this, we have specialist industry brokers who know their markets inside out. So if you are in hospitality, Ben will handle your requirements whereas if you're in the Ambulance and Medical sector Roger will assist.
Our brokers will first delve into your business and understand its offering and the asset that you are looking to acquire, this will typically take us around ten minutes on the phone. We then request a few documents from the business so that we are equipped to meet with a lender. We handle the rest from here, we will match your proposition to the most suitable lender, taking care of all the communications and paper work. We then present you back with a written acceptance from the lender for you to sign. The lender will then pay the supplier on your behalf and arrange to have the asset delivered. When using a broker, like GSM, the headache of arranging funding is removed allowing you to focus on your business.
To arrange a no obligation quote, give us a call on 020 8874 9994 or head over to our contact page to get a quote online. We are also happy to explain the differences of Leasing and Hire Purchase and help lay out the benefits of each and suggest what might suit your business best.
So whether it is gym finance that you need or retail finance you desire, we have a finance broker to help your business grow.