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REGION: UNITED KINGDOM
TYPES OF ASSET FINANCE

THE DIFFERENT TYPES OF ASSET FINANCE AND WHAT YOU NEED

Many businesses operating across a diverse range of sectors rely on asset finance at some point in their business journey as they grow, expand or explore new opportunities.

For many businesses, especially start-ups, asset finance provides the opportunity to acquire the equipment they need to grow that otherwise would not have been affordable. Businesses can also use their own assets, such as expensive machinery, vehicles or property, to secure a loan from an asset finance provider in the UK.

There are a variety of different types of asset finance that you should be aware of before deciding on the best option for you.

What is asset finance?

Asset finance is a type of business finance that enables companies of all shapes and sizes to acquire the business assets they need to grow by spreading the cost of purchase. This means that they can keep as much cash in their business as possible, which is crucial during those early years.

Many businesses use asset finance to purchase equipment and technology, including vehicles, machinery, and computer equipment, as well as other items they need, to run their business and optimise growth.

HOW DOES ASSET FINANCE WORK?

Asset finance allows businesses to purchase physical assets by making regular repayments to the asset finance company.  This helps them to manage their cash flow effectively and work towards their growth goals.

And, depending on your finance agreement, you might have the option to keep the item at the end of your agreement.

WHAT ARE THE DIFFERENT TYPES OF ASSET FINANCE, AND WHAT DO YOU NEED?

Finance Lease

A finance lease involves leasing assets over an agreed amount of time, depending on the asset type this could vary between 3 - 7 years typically.

During this period, the full value of the asset will appear on the balance sheet, with an element of the lease allocated as a business expense, which is then passed through the profit and loss account.

The finance company maintains full ownership of the item until the final payment has been made. At the end of the agreement, you can either return the asset, purchase it for an agreed fee, extend the lease, or return and refresh your equipment to the latest version(s). 

Specialist Purposes

Many businesses need asset finance for a range of specialist purposes, such as equipment that is bespoke to their company needs.

From specialist farming equipment through to biomass boiler finance, this type of asset finance is generally offered by providers with expertise in the relevant sectors.

Operating Lease

This type of asset finance is particularly popular with colleges and schools as under the Department for Education's guidelines; schools aren't allowed to enter into a 'lease to buy' arrangement. As such, the operating lease has to be fully compliant. An operating lease is also popular amongst those organisations looking to update their technology on a regular basis while also not having to pay the full capital cost of the equipment. 

However, the asset is only kept for a set amount of time, and the finance company you choose will take the asset back at the end of the agreement.

WHY CHOOSE 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. If you want an effortless way to promote, inform or share your content, get in touch today.  

Our friendly, helpful and professional team is always on hand to answer any of your questions and turn your vision into a reality when investing in technology that can help transform your business operations. 

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