Everything You Need to Know About Getting Asset Finance for Your Business

Asset finance is a powerful tool that allows businesses to acquire essential assets and equipment without a significant upfront investment by providing a way to spread the cost over time, making it more manageable for businesses to grow and thrive.??

While getting asset finance can be vital to growing your business, it can also be hard to understand, so let's take a look at the basics so you can be prepared for growing your business.?

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What is Asset Finance???

Asset finance is a form of funding used to purchase assets and equipment for business use. These assets can include machinery, vehicles, technology, office equipment, and more.??

Instead of paying the full cost upfront, businesses can secure asset finance to spread the payments over an agreed-upon period, typically through fixed monthly instalments.?

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Benefits of Asset Finance?

Cash Flow Preservation: Asset finance allows you to preserve cash flow instead of tying up large amounts of capital in one purchase. With this, you can allocate those funds to other areas, such as marketing, hiring, or research and development.?

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Better Equipment: By spreading the cost of assets over time, you can access more expensive, higher-quality, and more advanced equipment that might have been beyond your immediate financial reach.?

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Convenience: Asset finance is often more accessible and quicker to arrange than traditional loans, making it a convenient option for businesses that need to act fast to seize opportunities or address equipment needs.?

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Types of Asset Finance?

Finance Lease: In a finance lease, the finance provider purchases the asset on behalf of the business and then leases it back to the business for an agreed-upon period. The business pays fixed lease rentals throughout the lease term and has the option to purchase the asset at the end of the lease.??

Hire Purchase: In a hire purchase agreement, the finance provider agrees to purchase the asset on behalf of the business, and the business repays the cost of the asset plus interest over an agreed-upon term. Once all payments are made, ownership of the asset transfers to the business.??

Operating Lease: An operating lease is similar to a finance lease, but it typically covers a shorter period, and the rentals paid are usually lower. At the end of the lease term, the business can return the asset, upgrade to a newer model, or extend the lease.?

Chattel Mortgage: A chattel mortgage is a type of loan where the business takes ownership of the asset at the time of purchase, and the finance provider takes a mortgage (security) over the asset. The business repays the loan over an agreed-upon period, and once the loan is fully repaid, the mortgage is removed.?

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Considerations for Businesses?

Assessing Asset Needs: Before opting for asset finance, you should assess your needs and whether financing is the most suitable option. Consider the benefits of ownership versus leasing and evaluate the expected return on investment.?

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The Right Structure: Each type of asset finance has its own advantages and considerations. You should carefully choose the finance structure that aligns with your financial goals and cash flow management.?

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Repayment Capacity: Assess your business's ability to meet the monthly repayments without compromising other financial obligations. A well-crafted financial plan can help ensure that the asset finance fits seamlessly into your overall financial strategy.?

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Future Needs and Flexibility: Consider your business's future growth and expansion plans. Ensure that the asset finance arrangement allows for flexibility in upgrading equipment or adding new assets as your business evolves.?

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Asset finance is a valuable tool to acquire essential assets without exhausting cash reserves. By understanding the benefits, exploring the various types of asset finance, and considering the specific needs of your business, you can make informed decisions to drive growth and propel their business to new heights.?

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For the best support available, come and see the team at Glass Financial! Our advisors are experienced businesspeople that will take the time to understand your business. They can then assist with selecting the best asset finance from available options or develop a bespoke product to suit more complex requirements.?

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Speak with the Glass team today on 1300 245 277 or send an email to [email protected]?

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