How your assets and equipment could finance business growth. Many businesses find that their capital has become tied up in their assets and equipment. Releasing the equity within these assets is therefore a great way to free up much needed funds, which can then be reinvested into the business in different ways. The simplest and easiest way for businesses to free up this capital is through asset and equipment refinancing.
Similar to re-mortgaging a house, equipment refinancing involves an asset management firm either buying your equipment and then leasing it back to you, or if you have yet to buy it outright, paying off your original loan and then offering you a new loan with lower and more affordable interest rates and payments instead.
This financial model is especially useful for companies that have a lot of expensive equipment, whether it is medical, agricultural or IT related. Whatever the asset, equipment refinancing could really help you to build the funds you need to expand your business.
Here are our top five reasons for making use of this financial model.
It’s a great way to inject capital into your business
If you own your assets outright, refinancing them can be a great way to inject a large lump sum into your business. And, as the monthly repayments are kept low you’ll be able to reinvest this money back into your company’s continued growth.
- It can reduce monthly repayments
When you refinance your assets, they’ll be sold back to you at a lower monthly rate and with reduced interest, as when an asset is refinanced the figure is based on the market cost minus 30%. This will then allow you to use the money that you are save in other areas of your business.
- You can continue to use the asset after it has been refinanced
Refinancing your equipment will not affect your use of the asset, and you will be able to carry on using it throughout the process. This means that man-hours will not be lost, and productivity and service levels will not be affected.
- The capital raised can be used to buy other assets or equipment
The capital that you raise from the sale and leaseback of your assets to a refinancing company or through reducing your monthly payments, can then be put towards purchasing other vital equipment or marketing efforts to build your organisation.
The money that you save through refinancing doesn’t have to be used for purchasing new equipment though, it could also be used to pay staff wages, rent office space or to buy new services; the options are endless, and yours to decide upon.