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If you are considering purchasing a new business asset, whether it be a car, commercial vehicle or truck, or a piece of equipment, either to replace an outdated asset or to help your business grow, then asset finance is a great solution for you.
Asset finance facilities are fantastic for business owners for two main reasons.
- Asset finance helps smooth out cash flow by allowing bulky equipment to be paid off in small monthly instalments.
- Asset finance does not require security from equity or other properties. This allows business owners to apply their property equity or cash to other purposes such as business growth or wealth creation.
How do you know if asset finance is right for you?
Here are some questions to consider when determining if asset finance is right for you and your specific circumstances.
- Are you or have you been in the business for at least 12 months?
- Do you require a replacement or a new asset or vehicle for your business?
- Are you looking for a quick, easy, and pain-free solution to fund your asset purchases without tying up valuable cash to a depreciating asset?
- Are you looking for a facility with the flexibility to determine the monthly repayments?
- Do you have a clear credit history?
If you answered ‘yes’ to these questions, then it’s high time to consider asset finance to fill your business needs.
Since asset finance does not take security over any of your properties, your equity is available to secure business lending, personal investment lending, or an overdraft for business if you need working capital to support your business.
The Asset Finance Application Process
The application process is quick and often streamlined without the need for financial statements. In many cases, businesses in operation with GST registration for two years or more would not need to provide financial statements to the lender. There is no premium on interest for the streamlined or ‘matrix’ deals.
Streamlined finance is available for both new and used equipment. It can also be used to purchase from a dealer or a private seller. Purchasing from a private seller is generally more expensive and takes longer than purchasing from a dealer.
Generally, the timeframe for an asset loan approval ranges from 2 hours to 2 days. While it would take about 2-3 days for the settlement. These timeframes may vary depending on the COVID-19 lockdowns imposed in the areas where the financiers’ processing centres are located.
Managing Cash Flow with Asset Finance
The key to managing cash flow is being able to set monthly commitments at a level your business can afford. Asset finance loans provide business owners with the flexibility to set their loan terms, including the ‘balloon’ payment or the large payment due at the end of a loan term as agreed upon by the lender and the borrower.
The borrower has the ability to set the term over a number of years, as well as the lump-sum payment required at the end of the term. This flexibility is incredibly useful if you have a pattern of trading in vehicles at a certain period of time.
Say, for instance, the deal is structured to be financed over a term of three years or 36 months with a balloon payment of 20-30% of the funding amount, the vehicle may be traded and the trade may be used to pay out the lump sum at the end. On the other hand, if you practice holding onto vehicles for a long period of time and ‘run them into the ground,’ then a 5 or 7-year term with no balloon may suit you better.
Want to learn more about asset finance? Download our complete asset finance guide to learn everything you need to know about asset finance.
Think asset finance is right for you? Let’s discuss.
Condon Noller has access to funders who can fund equipment or vehicles up to the age of 20 years by the end of the term of the finance. Contact us today so we can discuss and give you a quote within the hour.
Rory Condon: 0427 224 442 | 4937 5608
Matt Noller: 0438 766 165 | 4620 4401
Nijo Antony: 0499 032 585 | 4937 5623
Connie Blunden: 4937 5616