In most situations, this isn’t true. Using Asset Finance to purchase your business-essential equipment with minimum cash-outlay, whilst paying for the asset over its economic life, is highly beneficial for all business.
Additionally, you will be using an asset while you need it then have an option to give it back and replace it with something better. It will also allow you to avoid paying a large amount of money for an asset that will only depreciate.
In truth, ANY business, whether it be a start-up business building from scratch, a well established 100-year-old family business or huge companies that trade on the stock market can attain funding for asset finance.
Many people believe that lenders will only advance money to a business that is very large when really, the important issue to the lender is that the company they are lending can show support that they will be able to repay them.
Regardless of the asset that you want to purchase, anything upwards of £1000 can be funded by asset finance. Whether its a large new piece of machinery that is worth £300,000 or a new piece of IT Software that costs £2,000 – asset finance is the most ideal way to fund your hard and soft assets. And it doesn’t matter what the asset it is… if it can be funded, LUV WILL FUND IT!
This is another myth, the majority of businesses that use asset finance have the cash reserves to pay outright yet use this purchasing scheme as it is more beneficial for them. Financing your assets allows businesses to pay for their assets that they need using their ongoing cash flow. This way, you can use your working capital to invest in other areas of your business which require large cash amounts.
Relatively, no, it is not. With whatever the asset is that you need to maintain or grow your business, you will have some heavy expenses. Not having this equipment will have a greater detriment on your business income as the failure to fulfil the requirements of existing clients or the specific needs a potential new contract are not met.
In many cases, businesses compete for contracts and need to acquire new, specialist assets quickly to offer what their competitors cannot… which is exactly what asset finance can allow a business to do, without the high cash-outlay.