Asset Finance

Asset Financing refers to using a company’s balance sheet assets, including short-term investments, inventory and accounts receivable, in order to get a loan.

There are many options available for your business to secure finance against a wide range of assets and with so many financing choices, the most appropriate for you will depend on your business sector and, of course, on your individual circumstances and requirements.

It’s important to remember that asset finance is a fixed term contract that cannot be withdrawn over the contract length. Don’t forget that a bank can also call in a business overdraft at any time!

Typical assets for security include:

  • Commercial vehicles and cars
  • Buses and coaches
  • Business and technology
  • Plant and machinery
  • Aviation, marine and agriculture

At Coreco we work with specialist providers to ensure you receive the best advice promptly and based on expert analysis.

Potential Financing Options

Hire Purchase

Also known as ‘lease purchase’, this lets you spread the cost of a purchase over an agreed period. When that period ends, you own the asset. It is an option well-suited to assets with good value retention and long asset life.

Contract Hire

Not dissimilar to a hire purchase loan, contract hires set up fixed payments based on an asset’s value and at the end of the term the asset is handed back. It’s a popular choice for the acquisition of a vehicle that is only needed for a specific period of time. While the vehicle wouldn’t be owned, this option usually means both lower deposit levels and monthly repayments than those associated with hire/lease purchase.

Operating Lease

With an operating lease, the borrower  pays monthly instalments on the value of the lease over the period it is required. They do not necessarily pay the full price of the asset, however, and the lessor usually sells the asset once the term is over. Because the asset is rented with monthly payments, any revenue received from the asset can be directly linked to the rental payments make. This option can be helpful if you need a particular asset to support a specific contract, or for high value specialised equipment (it is often used for aircraft or construction machinery).

Finance Lease

Again, here the asset is rented rather than bought, with repayments calculated over an agreed term. While the asset isn’t owned, you are usually able to benefit from an element (if not the majority) of the sale proceeds when the asset is sold at the end of the term .

Aviation and Marine Mortgages

Similar to the standard mortgage we are familiar with, whereby the mortgage is secured against property, in this instance, the security is taken over the aircraft or yacht itself.

Sale and Leaseback

Buying an asset outright ties up the outlaid capital completely, keeping valuable funds locked away from other potential uses. Selling the asset and leasing it back enables your business to benefit not only from the funds released but also from fixed monthly payments and, in some instances, maintenance of the asset can also be included within the monthly repayment. This option puts potentially essential cash back into your business, strengthens your balance sheet, and offers tax benefits, as lease payments can be offset against taxable income.

Please note that with all the above options, security may be required and fees may apply.

For more information please contact our Specialist Finance Division on 020 7220 5100 or click here for more contact options.

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