5 Common Misconceptions About Asset Finance
Date: 31 January, 2019
We take a look at the most common misconceptions about Asset Finance:
Only large companies use Asset Finance
This is a popular misconception driven by the belief that lenders will only advance money to businesses that don't need it. Any business from a start-up through to SME's and large companies who's shares are traded on the stock exchange use funding to expand their business. The important issue to the lender is that the company they lend to has the ability to repay them.
Asset Finance is for businesses that can't afford to pay upfront
Not true. Asset Finance is a way for businesses to acquire the assets it needs today and pay for them from the cash flow generated by them. Using finance allows you to retain current working capital and fund expansion in terms of man power and materials.
It is better to buy equipment outright rather than use Asset Finance
Using Asset Finance allows you to acquire the business-critical equipment that you need with minimal cash outlay, and allows you to pay off the funding over what may be its useful economic life. Why tie up valuable cash resource in a depreciating asset?
You can only use Asset Finance for large purchases
You can fund any asset from £1,000 upwards. It doesn't matter if it is software, IT, machinery or an addition to your vehicle fleet. We have funded the weird and wonderful from potato chippers to cloud based software, refurbishments of offices and hotels to start-up restaurants and even some classic cars - take a look at our PDF.
Asset Finance is expensive
Not necessarily, you will have the equipment you need immediately. The cost of not having equipment on finance could be far higher; if you cannot win or compete for business-critical contracts that are therefore won by your competitors meaning you do not grow but they do. It wouldn't be the first time a small company has beaten larger competition to contracts simply because they committed to the equipment needed to fulfil a potential client's specific needs, where their larger rivals would not.