Asset refinance advice and brokerage is an important part of our business. Asset finance is an agreement between the asset owner and an asset leasing company whereby the asset is identified, valued and funds are then made available dependant on equity and valuation levels. A asset refinance or lease agreement is drawn up and regular payments are made to the asset refinance company per an agreed amount over a set period.
Many assets rich businesses chose asset refinance because the arrangements enable a business access cashflow tied up in already owned assets. There are clear tax benefits to asset refinance too as the payments are classed as expenses.
The main advantages of asset refinance are:
- Simple and cost effective method to release funds from existing balance sheet assets
- Fast method of accessing cash in cases of emergency or as a method to fund expansion.
- The business can continue to use the asset without any break.
- Asset finance is a flexible way to access funds
- Asset refinance agreements can be paid weekly, monthly or quarterly to suit.
- Asset refinance agreements are usually paid back at a set rate of interest.
- The cost of asset refinance payments are Profit/Loss items so do appear on the balance sheet.
- A businesses credit rating is not affected because asset refinance payments are treated as business expense rather than a business debt.
- Asset refinance can provide a much need cash injection in times when business is challenging.
- Financial directors often favour asset refinance to avoid hefty depreciation allowances.
Disadvantages of asset refinance
- The borrower will pay back more than the original price of the asset.
- Asset refinance contracts tend to be rigid, set over a fixed term.
- Interest rates are generally fixed
- Personal guarantees are often required from the businesses owners or directors to secure the asset refinance.
What types of assets can be considered for asset finance
We are experts in the asset refinance section and can advice on arrangements that suit both the borrower and lender. Please contact us to receive an asset finance quote.