Asset Finance 2

Asset Finance 2

Asset Finance 2

Asset finance can be a form of commercial finance that describes a way that assets may be bought. The best method to do that needless to say is just to pay for them outright. At least, that is the cheapest method to do it. That would mean sacrificing a number of your liquidity though, which is the reason that lease-back schemes are also available. The lease back is a way of acquiring financing from assets you already own, but much more on that later.

Very first of all, why would you ever desire to use company finance rather than just going to the lenders yourself? That's a very great question but there's an equally excellent answer. Really it's not just one answer it's a series of answers. One of the primary answers to that question is that it opens up a network of commercial lenders which otherwise would have been unavailable. A number of these lenders only like to handle brokers, they don't wish to be going around to individual businesses. This means they do not actually have to advertise, at least not as a lot, they can just go to the brokers. With high street banks, everybody knows they are there so the business will come to them. When a lender has to start looking for individuals to lend to though that may not look very good. In any case, that is the way that it functions. So in case you are a company and you would like to have full access to all commercial lending opportunities then you actually have to go to a broker.

There's yet another reason to go to a broker though, they don't just open doors. Instead, they step by means of the doors also and begin to negotiate on your behalf. They know that they are working so that they can make themselves valuable towards the business so they have to work hard. If they can't get a better deal than the company could have got itself from just going to a bank then there would be little point in going to them. So this does two things, it means that the best interest rates on your loans will likely be achieved, and it also indicates which you do not have to waste your time looking for financing, and rather can do all of the things you need to do to run your company effectively. So this saves time and cash, and we all know what time translates to so it really saves funds and much more cash to use commercial finance brokers.

Back to asset finance then. Say you're a manufacturing company that needs new manufacturing equipment. This covers a broad range of different things obviously, perhaps it's cranes, perhaps it's factory equipment, perhaps it's just trucks to carry stuff around. It doesn't matter what it's, if it's a capital asset then you're going to need to get it. Now you'll find two reasons you might want financing for this. The first one is that you do not have enough funds so you will have to pay for it over time, in part from the funds that it really is going to make you. The second one is that you do have the cash but you would like to keep that for other things. There again, you would rather pay for it over time.

This second reason is also why the lease back scheme is at times employed. You've now got the piece of equipment but you need money on hand, so what you are going to do is have a commercial lender lease back the machinery to you after they have bought it. This frees up plenty of capital in your firm.

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