What is Asset Finance?

Asset Finance is used by businesses in all industries to fund a multitude of different assets.

Here at SAF we understand the pressure of building a successful business, and the fundamental role that your equipment and machinery have to play in that, however, these items come at a cost, Asset Finance can be used in order to acquire the equipment you need whilst keeping cash in the bank.

Having access to a number of lenders across the banking sector means that SAF can truly build you a bespoke finance package to fits your specific business model.

At SAF we take the time to discuss your business to get a real understanding of where you want to get to and how different finance options can help achieve that, be that a hire purchase, lease purchase, refinance, contract finance.  We will then, work across our lending panel to secure you the best possible deal in a structure that suits you.

Hire Purchase

Keep your cash in the bank but still acquire the assets you need for your business with a Hire Purchase Agreement, a flexible alternative to paying large sums of money outright for industry assets.

Hire Purchase agreements allows you to acquire an asset and spread the cost through affordable monthly repayments. Giving you the flexibility to budget for in your business outgoings, and allowing you to acquire the tools you need for your business. Payments can be defined to suit you and your budget, with repayment terms ranging from 12-72 months, we can put together an arrangement that works for you, and at the end of the agreement you will own your asset outright.

When a VAT deferral is put in place it helps the business reduce its upfront cost, whereas without it the business would normally have to pay the deposit and the VAT up front.  Normally 10% deposit and 20% VAT so an overall deposit of 30%.  To help SMEs purchase needed equipment lenders often offer this type of structure to minimise upfront costs and help cash flow. Even though the VAT is deferred the lender still actually pays the VAT at the point of sale, giving the business the 3 months to claim the VAT back from HMRC, this is then collected along with a monthly payment in line with their VAT quarter.

There are a number of benefits to using Hire Purchase, including;

– At the end of the agreement you will have full ownership of the asset

– Easy to incorporate into your monthly business expenditure

– Keeps your cash in the bank, rather than tied up in assets

– Agreements are flexible, you can settle the amount early or make over payments throughout the duration of your agreement

– Option to defer VAT payment for up to 3 months to support cash flow.

Finance Lease

Finance Leasing means your business can take advantage of the flexible repayment terms and fixed interest rates. Payment terms can be structured in line with your business’ cash-flow to make budgeting easier. Finance Lease funding is normally shown as ‘on balance sheet’.

Finance Leasing is a tax-efficient option for your business to acquire the equipment it needs without using up cash that could be used elsewhere. Your business can benefit from the VAT only being payable on the rentals, not on the purchase cost. Plus, you may be able to offset the rental payments against your taxable profits, depending upon the asset type and term.

A Finance Lease is suitable for businesses of all shapes and sizes. For example, if your business needs to purchase agriculture machinery and avoid having to pay upfront the full VAT for the asset, and would like to recover some of the asset’s value at the end of a fixed period by selling the machinery on behalf of the lender; then a Finance Lease could be the right finance solution for your business.

Reasons to choose finance leasing:

– You can reduce upfront costs. Leasing an asset monthly means you don’t have to pay a lump sum upfront, which can be beneficial to your businesses cash flow.

– You may be able to offset leasing costs against taxable profit.

– Swedish Asset Finance can tailor flexible lease payments to tie up with your cash flow.

– There is the option to carry on renting the equipment once the term ends, often for a reduced cost or sell the asset and retain a proportion of the cash proceeds (if permitted in the lease contract).

Sale & HP Back

Sale & HP back is a way in which you can refinance equipment that has been purchased by a business in the last 90 days into a finance agreement which in turn releases cash back into the business.

You will agree with the lender a value for them to purchase your asset, and use a HP agreement to finance the asset back to you over an agreed period of time.