According to the Small Business Finance Markets Report 2018/19, the number of businesses using asset finance grew by 3% in the last year. This was put down to the current period of uncertainty and more businesses using external finance to put in place contingency plans or reducing their finance requirements as they delay longer term investment and expansion decisions.
Despite this, Wellingborough company Arkle Finance believes that asset finance – which refers to the method of acquiring a new or used asset, such as a machine or equipment - is still an underused source of funding that more businesses should be accessing.
“Many businesses are missing out on the potential benefits asset finance can provide,” says Brian Jerome, Associate Director at Arkle Finance. “This could be because they are not aware of the benefits, or that they just don’t know enough about asset finance to feel confident in pursuing it. When businesses have been turned down from other funding, they may not consider asset finance as a potential alternative.”
Provides access to funds for equipment when the business needs it without recourse to capital budgets or traditional lending resources which may not be readily available or are deployed elsewhere.
As the finance is secured against the asset, it doesn’t affect any other financial arrangements you have in place and offers an effective solution.
Asset finance is usually a really simple and quick to organise route to funding.
A defined payment plan can eliminate uncertainty, allowing businesses to budget for the duration of the contract.
Both a lease and a hire purchase agreement are recognised traditional forms of asset finance providing the client with the immediate use of the equipment. They allow the client the option of either maximising use over a medium term rental via a lease or, where the equipment is a longer life item, a hire purchase provides the option to purchase the product at the end of the period of hire for a pre-agreed sum.
“Businesses can be cautious when it comes to borrowing,” adds Brian “They are wary of taking on more debt and bank lending to businesses is decreasing. For these businesses, asset finance is a way to secure the equipment they need in order to continue doing their daily business or even expand, without having a negative impact on their bottom line.
Requiring funding for new equipment and assets doesn’t need to be a barrier to growth. The more that businesses recognise this, the less they will need to rely on loans and overdrafts and will be to be able to borrow without fear.
“Asset finance comes in many forms including leasing, hire purchase and loans, and the benefits of all of these can be particularly helpful for businesses, which is why they should seriously consider it as an option in 2020.”
Arkle Finance is a subsidiary of Weatherbys Bank and works with small businesses to help them to grow through providing the finance they need to purchase or lease new machinery or equipment.
If you would like to find out more about how asset finance could be beneficial to your business, call Arkle Finance on 01933 304899.