Asset Finance UK
What is asset finance?
Asset Finance is a flexible form of business funding in which the security provided to a lender is largely made up of the vehicles, equipment or plant and machinery used by businesses in their day to day operations.
Typically a business will use asset finance when needing to purchase or acquire specific tangible, moveable business assets and when the initial capital outlay to purchase these assets would be more than a business can afford to pay in one lump sum, or in which it is more practical, from a cashflow and/or tax perspective, to spread the cost of purchase over the useful economic life of the asset.
Whilst asset finance is perfect when purchasing new or used business assets, it can also be used to release cash in assets a business may already own, via asset refinance.
The UK Asset Finance market is huge with dozens of high street banks and specialist lenders, and hundreds of independent brokerages able to link businesses with bespoke funding solutions tailored to their business type and needs.
Asset finance benefits
Asset Finance offers many benefits to UK businesses, including:
- Cashflow Benefits – There’s a well worn phrase in business finance. “Turnover is Vanity, Profit is Sanity but Cash is King!”. Without sufficient cash reserves, every business will eventually fail. Asset finance exists to enable businesses to preserve their vital cash reserves so rather than using their cash to purchase assets, a business can acquire and benefit from the use of an expensive business asset today, but spread the cost over several years.
- Trading Benefits – by having the necessary vehicles or machinery businesses can acquire or service contracts over many years. The finance costs are then covered by the additional turnover generated by the business, year after year, from having use of the assets in the first place.
- Growth Benefits – many firms simply would not have the cash available to purchase the assets they need to operate, so without asset finance they could never grow, and many could never start. Asset finance allows growing companies the funding they need to expand the scale of their business allowing them to service more clients, employ more people and win more contracts.
- Tax Benefits – the UK economy depends on UK businesses growing and so the government offers tax incentives to encourage firms to invest in their businesses by investing in new vehicles, plant and machinery. Whilst we are not qualified tax advisors, and would always recommend businesses discuss their personal situation with their own accountant, asset finance does provide tax advantages to firms in most cases.
- Security Benefits – all forms of lending require some form of security offered by the borrower to the lender. Overdrafts, for example, will typically require the business to offer a debenture over all business assets to their bank. Sometimes this can extend to charges over directors’ homes. Security in Asset Finance, on the other hand, is typically tied only to the asset being funded, for example the truck, or bus or printing press or CNC engineering machine that is being purchased. The lender’s security will be the asset itself so in the event of default the asset is recovered by the finance company. This means that this lending doesn’t necessarily need to impact on a businesses borrowing requirements elsewhere, and the business owner can be confident in the security they are making available.
Types of Asset Finance we offer
The two main forms of Asset Finance are Hire Purchase and Leasing.
Hire Purchase (HP)
- Hire Purchase is a well-established method of financing for companies that wish eventually to take ownership of business assets.
- The finance company buys the asset on behalf of the customer, who then pays an initial deposit. The remaining balance, plus interest, is then paid over an agreed period. During this period, ownership rests with the finance company, who is effectively hiring use of the asset to the customer.
- Once the final payment is made, ownership transfers to the customer.
- Under a commercial agreement, the leasing company (known as the lessor) buys and owns the asset.
- The customer (or lessee) then hires use of the asset, paying rental over a fixed period. At the end of the contract, the customer usually has a choice of extending the lease, buying the asset or simply returning it.
- There are two main types of leases, namely Finance Leases and Operating Leases.
- Under a finance lease, the finance company owns the asset throughout and the agreement covers a set period – considered to be the full economic life of the asset. Often, there is an option to continue leasing at a reduced, or ‘peppercorn’ rate, at the end of the contracted period.
- As you are not the owner of the asset, you cannot sell the asset during the rental period.
- The finance company can claim the writing-down allowances and pass this benefit to you in reduced rentals.
- An operating lease runs for less than the full economic life of the asset, and the lessee is not liable for the financing of its full value.
- The lessor carries the risk associated with the residual value of the asset at the end of the lease.
- This type of lease is often used when the asset is likely to have a resale value, e.g. transportation assets. The customer gets the use of the asset, sometimes along with other services. Operating leases are particularly attractive to companies that frequently update or replace equipment and want to use equipment without ownership.
- The most common form of operating lease in motor finance is contract hire, particularly in the provision of vehicle fleets.
Why choose MacManus Finance for Asset Finance?
UK firms are well advised to engage the service of a skilled independent brokerage who can save them time and money by accessing the widest panel of options, who are Authorised and Regulated by the Financial Conduct Authority and are full members of the National Association of Commercial Finance Brokers trade association, as membership of both requires firms to demonstrate the highest standards of integrity and submit to consistent monitoring of activities, providing the business owner with confidence in the firm they have chosen to work with.
MacManus Asset Finance are one such firm – directly authorised by the Financial Conduct Authority, full members of the National Association of Commercial Finance Brokers, and with a customer base of almost 300 UK businesses whom we have supported for over 15 years.
This credibility combined with an extensive panel of asset finance providers, including some of the best priced, and most flexible lenders in the marketplace provides a winning combination.
Our business motto is “Never Just a Number” – and we take pride that our clients never feel like they are just a number to us, as so many business owners are made to feel by larger financial institutions.
Your business success is our business success, we never take our clients for granted, and will always aim to deliver more than our clients expect.
How to apply for Asset Finance with MacManus Finance
We make your asset finance journey as simple as possible.
From your first call, email or completed webform we will act as your trusted partner, understanding your objectives and putting together options for you to consider.
We may need to ask you some general business questions and ask for some financial information from you in order to carefully prepare your personalised quotation from our funding panel.
Once you have reviewed your no obligation quotations and are happy to proceed we will prepare your application and liaise with the lenders to secure the funding you need.
Once agreed we will notify you and then liaise with your asset supplier to request invoices and to prepare your finance agreement for signing.
From here we ensure everything is finally packaged and presented to the finance company who will activate your agreement and pay your supplier, allowing you to enjoy your new business asset and the benefits it brings to your business.
To begin please call 01443 800621, email firstname.lastname@example.org or complete the webform above.