What is asset re-financing?

Does your business own assets against which there are no outstanding finance facilities? Does it have assets whose value is in excess of any outstanding finance facilities? If it does refinancing these assets can be a viable way for you to unlock cash for your business!

What are the options?

Does your business have assets that are unencumbered [ ie are not subject to any existing finance]? If the answer is Yes, you could access cash for the business by either entering into:

  1. A secured loan
  2. A Hire Purchase [HP]agreement
  3. A sale and leaseback agreement – [Lease]

With options 1 and 2 the ownership of the assets remains in the name of your business. In the case of option 3 (leasing), however, the assets are sold to the finance company. They will then be rented back over an agreed fixed period.

For assets with existing finance arrangements against them, the options are the same as above. In this case, however, you can pay off the existing finance agreement. Then, you can have the remaining finance available for the business.

Which option is best for my Business?

Not every business is the same. Different businesses will have different requirements. This will influence which option is most suitable for your business. For example, these are just some of the considerations you need to take into account.

  • Do you want to retain ownership
  • How much funding do we require?
  • What can we use the funding for? 
  • Lowering monthly repayments
  • Tax considerations between loan/HP and lease.

What is the Process to get an offer.

Asset Finance companies will want to undertake valuations on the assets you are offering for re-finance. Normally they will work on ‘desktop’ valuations which would normally not incur any costs. So, If the finance company requires a valuation visit by a specialist valuation agent, you will incur costs. Normally, you must pay these up front.

The Finance Company will also want to ensure that your business can service the restructured finance arrangement. Thus they will want to understand your reasons for looking to raise additional funding.

Why use a commercial finance broker?

The process of re-financing assets can be complex. As such, it should never be the case that the first or cheapest offer should drive your decision making. So, It is important that you understand this, and what options available to you. For example:

  • Will you have early repayment options and are there penalties for such?
  • Is it a fixed term with no early repayment options for you?
  • Will you have to give Personal Guarantee requirements?
  • What will be the Length of term?

 An experienced commercial finance broker like Business Finance Services will help your business through the process. They can to ensure you understand the options and what would be best for your business.

Are you are looking to free up cash for your business? Do you wish to understand if asset re-finance presents a viable option? If you do, contact  us at Business Finance Services . Call us on 0800 093 5240. Or you can e-mail to enquiries@bufinserv.co.uk with your contact details and we will give you a call to discuss.

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Recovery Loan Scheme