Asset-based lending (ABL) is flexible which means it can be used in a variety of scenarios which require strong cashflow and access to working capital, such as:

  • M&A activity
  • Private equity buyout
  • Refinancing
  • Restructurings
  • Funding for growth.
  • M&A activity
  • Private equity buyout
  • Refinancing
  • Restructurings
  • Funding for growth.

Advantages of Asset Finance

  • Lack Of Debt
    Making use of asset finance allows you to keep your firm’s borrowing options open. An operating lease is classed as an expense rather than a debt so it does not effect your credit rating.
  • Stronger Cash Flow
    Small, regular lease payments free up your cash flow. This enables your company to adapt more easily to changing business conditions.
  • Clear Budget Management
    Paying a fixed monthly amount over a defined period of time makes for more straight forward budget management.
  • Tax Benefits
    Lease payments are defined as expenses which means that untaxed money can be used.
  • Lease Specific Bonuses
    Some leases can be arranged to include specific benefits such as equipment servicing or the ability to make variable monthly payments.

Disadvantages of Asset Finance

  • Fixed Contracts
    Asset finance contracts are usually arranged over a fixed term. In some cases it will not be possible to end the contract prematurely and if it is then it will usually be an expensive option.
  • Fixed Interest
    You will find that most asset finance agreements come with a fixed rate of interest. This can be costly if interest rates fall sharply. However rates could move in your favour so this can be a benefit in certain circumstances.
  • Greater Cost
    The total cost of repayments on asset finance are almost always greater than the cost of buying the asset outright. You should remember to include the tax benefits when comparing the two costs.
  • Extra Guarantees
    The lessor of an asset may require additional security depending on the financial standing of your firm. This could effect your company’s credit rating.

Once the contract is signed the facility will then be set up. Remember to seek advice/guidance before signing any documentation.

For further information about invoice finance please contact the confidential invoice finance advice team on 0800 597 4757 or apply online using the form opposite.

Asset Financing Menu