Get a Cash Boost with Asset Refinance
Asset refinancing allows you to release funds tied up in existing business assets, giving you access to cash quickly.
Make existing assets work harder for you and release equity from machinery, vehicles, plant and other business equipment, to provide a welcome lump sum for you to use, however you need.
Benefits of Asset Refinancing
Find out how Asset Refinance can help your organisation
WHAT IS ASSET REFINANCE?
The balance sheets of many businesses show a considerable amount of capital locked up in physical business assets. By taking advantage of asset refinance, this capital can often be released, while the business retains full use of the asset.
Refinancing is available on a wide range of items including plant and machinery, other business equipment, and vehicles of all types.
Asset refinancing uses the equity that the business holds in its existing equipment to raise working capital for alternative purposes. There are many reasons why you might want to access this capital, including:
- Funding a new contract or project
- Taking advantage of business expansion opportunities
- Investing in other business tools (which might be harder to finance)
- Easing cash flow concerns when unforeseen expenses arise
- Funding management buy-outs
- Consolidating other debts such as business loans or overdraft facilities
ACCESS WORKING CAPITAL QUICKLY AND EASILY
Perhaps the best aspects of asset refinance are that it can often be arranged very quickly and because the finance is secured against the asset, the criteria for lending are often less stringent than for other forms of business finance. This means that even if the business’ credit history is not perfect, it may be quite straightforward to raise the required capital.
Maxxia takes a highly flexible approach to business finance that is based on the unique circumstances of our clients.
This is backed by our highly experienced team, which has years of experience working with businesses across a wide variety of industries.
If you need to raise capital for any purpose and have existing business assets, we can help find the right asset financing for you. Simply complete our short form below and one of our finance specialists will be in touch to help you through the process.
Refinancing packages can take different forms, depending on the needs of the company. Perhaps the best known, and often used for vehicle fleets, is sale and leaseback. As the name suggests, this is where the business finance provider purchases the vehicles and leases them back to the organisation, often under a contract hire or finance lease agreement.
There are, however, other funding options that allow the business to take ownership of the asset at the end of the finance agreement, such as a hire purchase agreement.
ASSET REFINANCING EXAMPLE
Our client is a Midlands based engineering business, with two quality machine tools on existing finance agreements. They were financed separately; one was three years and the other three and a half years through a five year term on hire purchase agreements.
The two machines rentals combined were costing £6,100 per month. The settlement total for both machines was £185,000.
Our Midlands team found a solution for the client that both released cash and reduced the monthly cost. The machines were re-valued and one new finance agreement for the two machines was created over a four year term.
The monthly payments were reduced to £5,875 and a £50,000 equity release provided a very welcome cash injection to the business.
How Does Asset Refinancing Work?
Asset refinance uses security in an existing business asset to lend funds against. In simple terms, you sell the asset to an asset finance company in return for a lump-sum payment. You then repay the refinancing agreement in regular instalments over an agreed period.
The process is usually very quick and can give you a welcome cash injection to boost working capital or invest in other areas. To get the agreement in place, business finance providers will need to get some information about the asset to be refinanced. This will vary depending on the asset type but will typically be:
- Proof of ownership
- Make and model of the asset
- Year of manufacture
- Date of purchase
- Current usage (hours or miles)
The finance company will then value the asset based on this information. The business will also need to be assessed from a lending perspective to understand its credit status. Because there is security within the asset, this can be easier to qualify than for some other forms of finance, such as an unsecured business loan.
Once the agreement is completed, the funds are released quickly, often as soon as 24 hours.
Find out how Asset Refinance can help your organisation
REFINANCE A WIDE RANGE OF BUSINESS ASSETS
Different types of business have different types of physical assets and it’s possible to raise finance against most asset classes. These include:
- Machinery and plant
- Commercial vehicles
- Cars (usually known as Sale and Leaseback)
- Other business equipment
Assets with existing finance can also be considered. If an asset has existing finance, it is still possible to refinance it as long as the business has equity in it. For example, if a business owns a piece of machinery with a current value of £100k, and has existing finance of £20k against it, it will still be possible to arrange to refinance based on the £80k equity which it holds.
In some cases, it’s also possible to refinance the existing debt, which can reduce monthly payments by spreading the agreement over a longer-term, and sometimes at a more competitive interest rate.
We know that many questions are being asked about asset finance, from a simple ‘what is asset finance?’ through to wanting to understand the asset finance definition, define asset finance options and structures (such as hire purchase or finance lease), and how this form of business finance can be used. If you would like to find out more, we have an article covering all this and more – Asset Finance Explained.