What Are The Different Types of Asset Finance And Their Benefits Over Other Credit Facilities?

Most small business owners at some point in time will fall short of cash during the running of their business. Due to this, a business owner may need to find funding solutions as cash and capital are the lifelines of running a business, a sufficient cash flow is necessary. When the business owner fails to have sufficient cash flow to continue operations, they can seek alternative funding to assist with the operation of the business. One solutions is to seek out asset finance.

Asset Funding allows the business owners to boost cashflow or assist with expansion or purchase of much needed equipment. The reputable lenders of business finance such as Homesec Business Finance in NZ approve the application against security that the owner provides. A quick and easy process of accessing the cash for the business is to leverage the business assets or real estate assets to provide a cash injection. Some business owners still do not understand the significance of asset funding, which provide a quick and easy solution for acquiring the funds they require.

Different Varieties of Asset Finance

The different types of asset funding available for short-term business finance are as follows.

• Invoice Factoring

Invoice factoring is one of the popular types of asset funding for cash against the outstanding invoices of money that is owed to a business. The process includes releasing cash against the debt before the invoice is due. The advantage of this type of asset funding is that capital is readily available to business owners. The provider will collect outstanding invoice directly from the customer. The factoring service company will generally release from 60 to 90% of the invoice depending on who the supplier is.

• Finance Lease

Sometimes business owners need to purchase equipment or assets for their business growth. A finance lease will help the borrower to retain the cash flow they could use for making the purchase. During the repayment term, the borrower pays back the capital with the interest thus easing further pressure on the cash flow.

• Bridging Loan

Bridging finance is defined as short-term business finance that helps the borrower to overcome various problems when there is shortfall in cash flow. Bridging business loans provide access to cash quickly using available equity in real estate, the loan is repaid within a short period of time, either from increased cash flow or sale of an asset.

• Pre-shipment Finance

Exporters require the necessary funds for supporting the advancement of the massive orders of export. This funding will ease the cash flow pressure for the short term, especially applicable for the massive export orders, requiring more time for completing the manufacturing.

Process of Application for Asset Funding

Homesec Business Finance has an easy online application process where you only need to provide minimal documents to have the loan assessed, these include a copy of a rates notice, current mortgage statement and ID. If there is sufficient equity in the real estate asset then you are more than likely going to be approved.

Other lenders also ask for a detailed business plan on how the new asset or property will assist the owner in enhancing the profit or efficiency of the company. Full financial statements are also required by some lenders but not at Homesec Business Finance.

Advantages of Asset Finance

Asset finance is especially beneficial to start up businesses as they do not have the financial trading records to support a standard business loan.  Another advantage of asset funding is that the business owners do not have utilise their own cash resources, instead, they can implement those funds for the stock, overheads, payroll, and various operational costs. By obtaining asset finance for the business it can assit with expansion and see the business grow and succeed.

Final Thoughts

Unlike traditional loans and overdrafts, asset funding comes with easier terms and conditions. The applications for asset funds also get processed at a faster pace in comparison to other loan types. So, apply for one and take advantage of the benefits of this loan.