Asset based lending or leasing refers to taking out a loan to buy or lease assets which your company needs. It provides a secure and quick way to get a loan to cover essential assets which your business requires to keep operating and growing.
How Asset Lending Works
Asset lending is when money is borrowed to purchase essential assets for a business, such as office equipment, vehicles or even property. If the loan is not repaid then the lender has the right to seize the assets. This means it differs from a traditional bank loan and offers an alternative way to access vital assets your business needs.
Different types of asset based lending contracts mean that each one works slightly differently:
- Asset finance and leasing agreements: The lender buys the assets you need and leases them back to your company for a set monthly amount.
- Hire purchase asset finance: Your business pays a deposit plus monthly instalments for an agreed period (usually 12 to 72 months). At the end of the term the assets are yours.
- Refinancing agreements: Releases capital tied up in assets by the lender buying the equipment from you and leasing it back.
Why Use Asset Lending?
Advantages of asset lending:
- Easier to obtain than traditional bank loans
- Fixed payments make budgeting and cash flow simple to manage
- Most agreements have fixed interest rates
- Failure to pay only results in the loss of assets, nothing more
- Options to upgrade can be included in some asset based lending agreements
Disadvantages of asset based lending:
- Can be more expensive than buying certain assets outright
- Long repayment terms in some cases
- Value of equipment acquired through asset based finance cannot be deducted from your profits for tax purposes
Asset lending can help many businesses, but it’s important to be sure it’s right for your business model.
Asset lending - How MarketInvoice Can Help
At MarketInvoice, our invoice discounting solutions provide an advance against your outstanding customer invoices. We offer funding against select invoices, as and when you need – or you can also get regular funding through our whole ledger solution.
It’s quick and easy to access funds, which means you can get the cash flow you need to get on with business. With MarketInvoice, you get:
- Fast funding: quick funding decisions and set-up
- Hassle free experience: easy to use digital interface
- Help in real-time: personal customer support
- Straightforward costs: no hidden fees
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