Asset finance is a boon to small enterprises and startup business and also for businesses that are struggling to get enough finance to run operations. What is asset finance? Simply put, asset finance is the use balance sheets assets such as accounts receivable, inventory or short-term investments as collateral to borrow money. The borrower pays a security interest when they use asset finance, unlike in the traditional financial loans where the debt or equity securities are issued, and simply put the assets online to get quick cash flow into the operations.

This is a more practical way of generating funds to run businesses as the borrower is simply pledging future earnings to generate instant funds. The lenders usually agree to pay the loan on the basis of certain percentage value of the secured assets which usually is 70 to 80% of the receivables and 50% of the finished stock. The asset-backed loans are offered in a huge range of options by the asset finance lenders, and they may be banks and independent financial institutions. It is important for small businesses to find a finance company which will extend a line of credit to upcoming and small enterprises. They also like to offer bigger loans because the monitoring cost of asset-based lending whether big or small is the same. The task of getting asset finance could become much easier though if your company is able to produce good financial statements, commonly sold inventory, good reporting systems and has customers with a good history of paying bills.

Construction finance is a great instrument for people involved in the construction industry, as they can use it to get loans to buy machinery such as bulldozers, access platforms, cranes, concrete mixtures, excavators, diggers, JCBs, and generators. Spending your own money on this machinery may not be a smart decision when you have the option of buying it with others’ money. A builder can open up a long-term credit line for this purpose if he or she is able to please the lender with their professional showing. Using the right kind of asset finance could also help you in saving money and time which could be better spent in promoting your business. There are risks involved with possessing obsolete machinery which could materialise into tax outcomes and by getting the asset financing for new machinery you can potentially avoid these incidents. Asset financing covers a wide vista of businesses and therefore you need to choose the one that is most suitable for your business.