Asset refinance is a great solution to improve cash flow, by using the equity tied up in assets already on your balance sheet. It is best suited for businesses that have already invested in equipment and need to release some capital.
What is Asset Refinance and how does it work?
In overview, your lender will buy the equipment from you and will lease it back to you over an agreed period where you’ll make regular payments. The amount the lender may offer you depends on a few things:
- Type of asset
- Condition of asset
- Age of asset
- Percentage of the asset that you own (your equity)
When you receive your advance, the ownership is temporarily transferred to the lender, but it will not interrupt usage of the asset. Once the agreement has been fully repaid, the asset is then transferred back to your business.
Good to know: Remember refinance is a secured method of funding, so the asset can be removed from your business if you don’t keep up with your repayments.
Benefits of Asset Refinance
- A quick and simple way to inject money into your cash flow, without interrupting the use of the equipment
- You don’t need to own the asset outright as lenders look at the equity you currently have in the asset
- The repayment terms are usually generous, allowing repayments up to a term of five years
- Poor credit isn’t usually a problem for businesses looking to release capital
- It can help you to lower your monthly payments whilst also raising capital to purchase new assets, pay deposits on new acquisitions, or fund company expansions.
Things to Consider with Asset Refinance
- If you fail to keep up with your repayment schedules, the asset can be removed from your business
- You are responsible for the maintenance, repairs and insurance of the product
- It can be less cost effective than purchasing the asset outright due to interest costs and service charges
If you’re looking for help with refinancing an asset, don’t hesitate to reach out to our helpful team at Moorgate Finance.
Give us a call on 01908 92 62 62 or hit ‘Apply Now’ to start a free, no-obligation application.