So you’ve identified a gap in the market, done the necessary research to validate your idea, and now you’re ready to make your start-up business dream a reality. As most new businesses discover though, a lack of capital to begin with can really hinder your early development and make it tough to get off the ground.
With no trading history to prove your money-spinning prowess and no owned property that a funder can secure as collateral, accessing the finance you need can be tricky. The good news is that there is a multitude of funding options available to you, the difficult part is cutting through all that noise to find the choice that is right for you.
Increasingly, savvy-minded start-up businesses are turning to Asset Finance as their first port of call, but why is this type of finance so important for start-ups?
How Does Asset Finance Work??
Asset Finance is a way that businesses can acquire that computer, machine, vehicle, pizza oven, or pencil sharpener that they need to make the business work, without having to buy it outright. Rather than sharpening pencils with your teeth whilst you save up for that shiny pencil sharpener, Asset Finance can get you the asset you need to start sharpening pencils professionally from the off.
So, how does it work? An Asset Finance facility is a loan agreement between you and a specialist Asset Finance provider. Once approved, the funder buys the equipment you need, you start using it to make money for your business, and you pay for it by the agreed-upon loan terms.
The asset itself forms the collateral, so no need to offer up your house or your internal organs if you default, you will only ever lose the asset. But how do you know which type of Asset Finance is right for you?
Types of Asset Finance:
Hire Purchase: The most popular form of Asset finance is Hire Purchase. The funder purchases the asset in your name, and you pay for it (plus interest) by instalments. The lender owns the kit until it is repaid, then there is normally a minimal fee to own the equipment outright.
Equipment Lease: With leasing the lender buys the asset and allows you to use it over a fixed period of time. This is flexible because when the lease ends you can simply return the asset, buy it outright, extend the lease, or switch to an upgraded model.
Operating Lease: As above, but you only pay to borrow the equipment for the amount of time that you need it.
Asset Refinance (ABL): Asset Refinance or Asset-Based Lending (ABL) is different in that your existing assets are offered as security to borrow against. So, if you are fortunate enough to own a property, vehicle, machine, etc. (even your accounts receivables) you may be able to release funds based on their perceived value.
Why and How to get Asset Finance as a Startup:
With a fledgling pencil sharpening business and no collateral to speak of, your teeth are really going to suffer in those first few months! However with an Asset Finance facility approved by a specialist AF provider, you can spread the cost of that big shiny pencil sharpener over a relatively low-cost monthly plan.
As the asset drives revenue for your business, you pay off the loan for it – It really is that simple! The equipment forms the security so you don’t risk losing anything personal, and the lender is fully responsible for the asset during the term so you don’t have to worry about breakdowns or repair costs.
OK so I know exactly what Asset Finance is but how do I get it for my start-up? It can be a noisy market for new businesses and it may seem like a nightmare finding the Asset Finance you require, but you can cut through all that noise easily with the right support.
Reform Financial is here for exactly that. With our experience and dedication, we will find you the Asset Finance facility that you need. Click HERE for more information.
