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What is Asset Finance and How Does it Work?

bespoke - December 13, 2023

For many businesses, the key to growth and success is access to the crucial assets they need to provide high-standard services and stay ahead of their competitors. However, these assets are often unobtainable without paying a significant upfront cost. 

The solution to this is asset finance. In this blog, we’ll explore asset finance and how it can be used as a gateway to business growth. 

What is Asset Finance?

Simply put, asset finance is a strategic method of obtaining business assets without having to pay a significant investment upfront. Instead businesses can secure the asset by paying a manageable deposit, ranging between 5-20% of the cost. 

It involves securing funding for the purchase or use of assets, with the assets themselves often serving as collateral for the finance. But what exactly counts as an asset? 

Defining assets

An asset is a resource that has economic value and will generate future benefits for your business. From machinery and equipment to software or patents, an asset is whatever you need to make money further down the line. 

What are the different types of asset finance? 

Every business is different and there are a variety of avenues tailored to meet your various needs. 

Hire purchase 

This method involves paying for an asset through manageable instalments while it’s in use. Ownership is then eventually transferred to the business upon completion of the payment term. 

Equipment leasing

Here businesses lease an asset for an agreed-upon period by making regular payments. Once the lease is completed, there might be the option to purchase the asset at a predetermined price.  

Contract hire 

Typically applied to vehicles, this arrangement entails leasing an asset for a fixed duration, with the business paying a monthly fee. At the end of the contract, the asset is returned to the leasing company.

What are the benefits of asset finance? 

The advantages of asset finance extend far beyond accessing assets. Here are the X key benefits of utilising asset finance: 

Access to assets 

The most significant benefit of asset finance is that you gain immediate access to the assets you need to meet your business goals, leading to growth and success. 

Preservation of cash flow 

By spreading the cost of assets over time, businesses can safeguard their working capital. 

Flexible options

Tailored payment structures and end-of-term choices provide businesses with adaptable solutions aligned with their unique requirements. 

Access to cutting-edge technology 

Asset finance grants access to the latest equipment and technology without demanding substantial upfront investment. 

Tax benefits 

In certain cases, payments made through asset finance might be eligible for tax deductions, offering a financial edge. 

Which businesses can apply for asset finance?

Asset finance isn’t exclusive. It’s accessible to start-ups, small and medium-sized enterprises (SMEs), and larger corporations. Whether it’s machinery for a manufacturing firm, vehicles for transportation, or IT infrastructure for a tech start-up, asset finance accommodates a diverse range of business needs. 

However, eligibility criteria may hinge on factors such as the business’s creditworthiness and the type of asset in question. 

Asset finance solutions from Bespoke Commercial Finance

Whether you are a start-up aiming for growth, a mid-sized company looking to expand, or a large corporation seeking innovative solutions, our expertise in asset finance can be your guide. 

At Bespoke Commercial Finance, we offer personalised advice and a range of options, ensuring you find the most suitable avenue to secure those crucial assets without breaking the bank.

For more information about our services, contact our team today, we’re on hand to help. 

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