Using Asset Finance to Grow your Business 

By Chris White | Whiteroom Finance 

Around 30% of SMEs feel they have missed out on opportunities due to a lack of funding access. With asset finance, you can capitalise on opportunities and fuel your business’s growth by funding the purchase of the asset you need. It can allow you to increase productivity and revenue while maintaining a consistent positive cash flow.

With traditional lenders becoming more risk-averse and unwilling to provide funding, asset finance is an increasingly popular solution for Australian businesses.

What is Asset Finance?

Asset finance is a financing solution that enables businesses to access the funding they need to purchase an asset. Funding is usually provided in a fixed-term loan repaid in regular instalments over 24 to 60 months.

The funding allows the business to spread the cost of purchasing an asset over a more extended period and use the additional revenue the asset generates to pay for the finance cost. Asset Finance can be used to fund:

• Business asset
• Machinery
• Vehicles
• Technology

How Does Asset Finance Work?

Using asset finance, you can fund your business’s growth and development even if you don’t have readily accessible capital. Asset Finance allows you to upgrade and replace old asset without straining your finances.

For example, let’s say that you run a distribution and logistics business. To grow and take on new clients, you need to purchase a new forklift. The new forklift will cost $20,000 to $45,000, and the battery and charger will cost an additional $2,000 to $5,000. This means you need to raise up to $50,000 to purchase the asset you need.

With asset finance, you can fund up to 100% of the forklift value and spread the cost over a period of 2 to 5 years. With the new forklift, you can expand your capacity and take on new clients to raise additional revenue to pay for the financing and grow your business.

At the end of the financing period, you will own the forklift or have the option to purchase it for a nominal fee depending on the terms of the asset finance facility.

Business Asset Financing

Business asset includes all the tools, technology, and vehicles you need to run your business.

Commercial Asset Financing

Commercial assets are machinery, tools, and apparatus designed for a commercial enterprise.

Small Business Asset Financing

Asset finance is a funding solution designed for the needs of small businesses.

New Business Asset Financing

Start-ups and new businesses typically find it hard to qualify for bank loans and other traditional funding solutions. Asset finance is much more accessible, even for businesses without a long track record or credit history. Rather than tying up capital in an expensive asset, you can invest in marketing, staff, and other business areas that will help you increase revenue and profit.

In contrast to a traditional loan, asset finance is much more flexible and accessible. Because the asset’s value acts as collateral for the funding, you don’t need to put your home or property at risk to secure financing. The funding facility can sit alongside your existing finance arrangements and can be combined with other financial products.

For more information about the contents of this article please contact Chris White at Whiteroom Finance at chris@whiteroomfinance.com.au