How using asset refinance for small business raised £60,000
LendEdge were recently approached by a business advisor who’s client needed to raise cash to cover an exceptional bill.
A client visit was then arranged to discuss their requirements and to understand the business. The client in question is a well-established print company, serving clients nationwide. Now under the 2nd generation of family ownership, they had recently moved into a new, larger unit to enable further growth and product diversification.
Moving to a new unit, and moving all of the equipment within the business had proved to be very costly, and had placed strain on the business cash flow. In total, our client needed to raise £50,000 to solve their immediate issues. Several options were discussed, and the decision was made to look at using asset refinance for small business to raise the cash required.
LendEdge was then able to use it’s extensive panel of lenders to find the right partner for their client. It was essential to find a lender who not only understood the value of the assets being financed, but also the situation the borrower was in and their plans moving forward.
In total, £60,000 was raised for the client, allowing the immediate issue to be resolved, and leaving extra for additional working capital.
What is asset refinance for small business?
Very simply, when you purchase new or second hand equipment, you can put this onto asset finance. This means that you are spreading the cost of purchase over an agreed time period, typically on a hire purchase or lease agreement. With asset refinance, you are effectively selling equipment you already own to a finance company, being paid a lump sum upfront, and then buying it back off them. Typically on a hire purchase agreement. At the end of the agreed period, you own the equipment again.
How does asset refinance work?
The first thing is to assess the equipment which will be used as security and refinanced. In this case it was specialist printing machinery. Details of the equipment were then sent to the chosen finance company, and they were then sent to an independent valuer. This then gave the amount the lender could advance against the assets. A final inspection was then carried out, before documentation was raised and funds advanced to our client. Funds can be used for any business purpose, showing the flexibility of this type of facility.
What are advantages of asset refinance for small business?
- Improved cash flow
Asset refinance allow businesses to unlock the capital tied up in assets they already own. Cash can then be used for any business purpose.
- Potential for easier approval
Because the loan is secured against an asset with resale value, lenders may be more willing to lend to a business with less than perfect credit.
- Continued asset use
The borrower can still use the asset which has been used as security. This allows for business continuity
- Debt consolidation.
Asset refinancing can be used to consolidate multiple debts, into one single manageable loan. This can simplify credit management and improve the overall health of your bank account.
Asset refinance allows businesses to leverage the value of their existing assets to improve their overall financial position, support growth and manage cash flow more effectively.
Want to learn more?
For a detailed look about asset refinance visit Our Ultimate Guide to Asset Refinance here.
Also check out our blog which answers the question: Do You Need Good Credit for Asset Finance?
And for another case study, check out how one client saved £90k a year in costs using asset finance: Asset finance facility saves business £90,000 a year in costs.
For more information about how asset refinance for small business can help you, call Sam on 07837 812 145 or email sam@lendedgebf.co.uk