You may be surprised at just how many of your business assets you can apply for finance on. For example, have you ever considered approaching a lender for funding new office lighting? Whilst many people associate asset finance with larger scale purchases like vehicles or property, the reality is you can apply for business finance for almost anything your business needs to function.
Some assets will be considered hard, and others are referred to as soft assets. Whilst it’s our job to understand the difference, it’s useful for you to explore exactly what the possibilities for finance are in relation to these categories.
What is an example of a “hard asset” I could get asset finance for?
A hard asset commonly refers to high value, tangible items that are fundamental to your business. They provide strong security for lenders as they tend to retain – and sometimes increase – in value for many years beyond their origination. Hard assets suitable for asset finance could include:
- Property, land, and buildings
- Vehicles (click for a Case Study example!)
- Machinery (click for a Case Study example!)
- Plant equipment
- Engineering equipment
3 Advantages of Hard Assets:
1. Tangibility: Hard assets are physical, tangible assets that can be seen, touched, and protected. This provides a sense of security and makes it easier for you to secure finance on them.
2. Intrinsic value: Hard assets have an intrinsic value that is less dependent on market trends and therefore protects you, the asset and the lender against economic downturns and inflation.
3. Frees up Company Cash Flow: Hard assets often come with a hefty price tag that can negatively impact on your cash flow. Outsourcing the finance into manageable, monthly payments helps to protect your working capital.
What could make it difficult to be approved for finance on a hard asset?
Hard assets often require a significant amount of capital to maintain beyond the purchase itself. For example, investing in property ongoing maintenance costs, taxes, repairs, and insurance for the asset to hold its value. Therefore, you’ll need to be able to clearly demonstrate your ability to manage these costs to a lender.
What is an example of a “soft asset” I could get asset finance for?
A soft asset is still something your business needs to function but with a much smaller value. They often amount to little-to-no value by the end of an agreement term and provide less security. Soft assets suitable for asset finance could include:
- Computer hardware or software
- Office furniture
- Telecoms
- Air conditioning units
- Lighting
3 Advantages of Soft Assets:
1. Scalability: Due to the lower value and finance requirement, soft assets can be easily scaled to accommodate your business growth and expansion as required, without significant delays or costs.
2. Competitive advantage: Using finance solutions to keep your soft assets up to date ensures your business is running as efficiently as possible and helps to keep you ahead of the competition.
3. Protects your cash flow: Soft assets are the ones that are most likely to breakdown without notice and leave your business in the lurch, for example telephone outages. Financing the replacements helps to protect cash flow and prevent any unexpected cash drawdowns that may have otherwise impacted on the wider business activity.
What could make it difficult to be approved for finance on a soft asset?
Soft assets have a small value, are subjective in nature and can be difficult to measure, quantify, or value accurately. They are more vulnerable to rapid changes in the economy and depreciate throughout a term agreement, in some cases even becoming obsolete by the end. This can make it difficult to secure finance on them without a broker to support you.
Securing business finance on your assets
Around 29% of the customers we have secured finance for over the past 8 years were first declined by their banks, so even if you think you can’t secure finance, we’re here to assure you – we can!