What is asset refinance & how does it work?

Many businesses have a significant amount of capital tied up in physical assets such as IT equipment, machinery, and other technology.

What is asset refinance?

Asset refinance allows businesses to release capital that is tied up in existing assets, providing fast access to cash. This type of finance is available on a wide variety of assets, including plant and machinery, vehicles, and business equipment.

In this article, we’ll explain how asset refinance works, the benefits of asset refinance for businesses, and who asset refinance is for.

How does asset refinancing work

Asset refinancing involves selling equipment or machinery to the finance provider. These assets provide security, against which the funds are lent.

The finance company will value the asset based on factors including:

Make
Model
Year of manufacture
Date of purchase
Current usage

They will also assess your business’ credit status, however, because the finance will be secured against an asset, it can be easier to qualify regardless of your credit history. Asset refinance can be provided on leasing and hire purchase agreements.

If the agreement is approved, the provider will lease the asset back to you in return for an agreed rental payment. The funds are usually released quickly, often in as little as 24-48 hours of approval.

What are the benefits of asset refinancing?

Asset refinance offers a number of benefits for businesses, including:

Why is it changing?

The implementation of IFRS 16 isn’t an altruistic move by DfE to make life easier for schools; it is an international accounting standard that all organisations have to implement and so DfE have been required to follow suit.

Free up working capital

Free up capital for a targeted cash injection when your business needs it.

Quick and easy

Asset refinancing is a relatively easy form of finance, giving the business a fast injection of working capital and immediately improving cash flow.

Use existing assets

With asset refinance solutions, businesses utilise their existing assets, rather than having to take on new equipment.

Easier approval

Because the assets being refinanced provide additional security against the value of the loan, this type of finance is often easier to obtain – even for businesses that don’t have a perfect credit history.

Better manage cash flow

Because repayments are made in fixed, monthly amounts, it is easy to manage cash flow.

What is the point of refinancing?

A business may choose to refinance assets in order to:

Expand and diversify
Fund a new contract or project
Invest in new tools and assets
Improve cash flow
Consolidate debts

Who is asset refinancing for?

Asset refinance is a finance solution for businesses, rather than individuals. It can be beneficial for businesses looking to free up capital, improve cash flow, and invest in their growing business.

Asset refinancing from CHG-MERIDIAN

Here at CHG-MERIDIAN, we can help you stay ahead of your competition with tailored asset finance solutions that keep you on top of the latest IT, healthcare and industrial technologies.

To find out more about asset refinancing and whether it will work for you, get in touch.