What is Asset Finance and how will it help to grow your Business?

The financial market of New Zealand has many products to choose from. Each of these products has unique features to fit the varied needs of the borrowers. Business asset finance is a popular loan type among business owners.

Companies need new equipment time and again to grow & sustain in the rapidly evolving market. Asset financing can be the ideal solution in this case. It is better to gain adequate knowledge before you decide to take out any loan type. Continue reading for some additional information.

What is Asset Finance?

Asset financing is short-term business finance that uses a company’s assets (Machinery, Equipment, invoices, real estate assets) to borrow money or obtain credit. Asset Finance gives businesses access to assets and equipment without depleting the funds needed to pay employees and track cash flow.

You can use Asset finance to purchase or lease a vehicle, machine, or office equipment. Asset Financing Loans include construction equipment, imported machinery, office furniture, and coffee machines. No matter how unique or unusual, if the asset you have in mind is central to your business, you can apply for asset financing.

What are the types of asset financing?

There is a wide range of options in leasing and installment purchases, with some options better suited to the asset you are looking for than others.

1. Contract hire

It is also known as vehicle inventory financing, as it can finance company vehicles only. The business lender purchases the car needed for the business, and the borrower repays it in installments over the agreed lease term. Service costs and maintenance are the borrower’s responsibility, as is the disposal of the vehicle at the end of the lease.

2. Operating Lease

This is a term lease that does not pay the total cost of an asset, often a special-purpose machine, because it is leased for a period of less than its useful economic life.

Often cheaper than equipment leasing because the company only pays an estimated value for the item over the agreed limited lease period. The leasing company will be responsible for maintenance and recover the asset at the contract end.

3. Installment Purchase

It allows you to purchase an asset over an agreed-upon period by dividing the cost. The item appears on your balance sheet, and insurance and maintenance are your responsibility. At the end of the term, the asset will be yours.

4. Equipment Leasing

In this type of asset financing, the business lender purchases the asset your company needs and rents it to you. Providers bear the cost of maintenance and repairs. You only must pay a fraction of the total value upfront. It is ideal if you want a high-quality, expensive manufacturing machine but need more funds to buy it outright.

Generally, you must pay the first month’s rent in advance while the rest is spread over the rental period. At the term end, you can continue leasing, purchasing, or simply returning the device. It is especially popular with companies that need help to make medium-term financial forecasts because they need to respond to rapid change.

5. Finance Leasing

Also known as capital leases, long-term leases are designed for the useful life of an asset. Get the most out of your facility, pay it back over time, and be responsible for maintenance and insurance.

Payments generally continue until the lender recovers at least 90% of the cost of the property value. Lenders can provide a percentage of the value after the item is sold, but your company does not have the option to purchase the asset directly.

6. Asset refinancing

This option is different as you secure a loan against an asset your business already owns (such as a vehicle, equipment, or commercial building) to free up the cash your business needs. When you refinance an asset, the lender makes an offer based on the equity you hold in the asset. Unlike short-term business finance, it means you can free up cash from your partially-owned physical assets.

The refinanced asset must be physically removable to be considered collateral for the loan. The amount you can borrow is dependent on the asset value that releases the cash. If refinancing is agreed upon, the lender will pay the provider in installments over the agreed term, including interest on the loan.

How can Business Asset Finance help my business grow?

Let us now check out how a business asset loan can assist you in growing your business.

1. Flexibility

With various financing options available, asset financing offers business owners a flexible solution to purchase equipment critical to their growth.

2. Fast and easy process

The process of buying assets with Asset Finance is surprisingly easy. Just identify the assets you wish to purchase and the supplier you want to purchase from and provide supporting documentation such as past business accounts (this varies by the funder). Then approach a panel of lenders to find the best deal for yourself. The process is surprisingly quick, with funds disbursed within days.

3. Cash flow

Purchasing and prepaying for expensive equipment is impractical and can hurt a company’s cash flow. By funding equipment through asset business lenders, businesses can spread costs over a while and free up cash flow for other uses that support business growth.

4. Tax Benefits

Payments for certain asset financing agreements are tax-deductible business expenses and are available for investments. If you purchase equipment, machinery, or vehicles (known as plant and machinery), you can deduct some or all of the item’s value from your profit before paying the taxes.

You can claim a capital deduction if your equipment is a:

Direct purchase
Purchase by installment purchase
Offer under a long-term finance lease

End Takeaway

Any business, regardless of size, can benefit from business asset finance, small companies looking for growth and access to the facilities they need to do so. Asset financing is available to limited liability companies, public companies, and sole proprietorships to help spread the cost of the assets a business needs.

How To Get Fast Business Loans For A Restaurant?

In the past few years, the growth of the restaurant business has seen impressive growth. Many people have joined the restaurant business. Due to this, the competition in this industry also increases more than in the beginning. So, to remain ahead of the competitors and run a restaurant efficiently, correct planning is necessary.

But a beneficial strategy alone cannot deliver the desired result as with it, you need financing. Without a decent amount of money, running the restaurant business is challenging. But if you do not have sufficient savings, from where you will get the cash, right? If this is the case, you can opt for fast business loans to get enough capital for your restaurant.

These financings are beneficial to start, expand, support, or renovate a restaurant business. Through fast business loans, you can get rapid access to decent money, allowing you to convert your short and long term goals into a reality.

But to get money from the best bridging loans, you first need to prepare a detailed, relevant, and transparent business plan. Besides, you require due diligence and take numerous other steps as well. So, if you want to take out such loans for your restaurant business, you can read the below segments. Here we have shared an overview of all the information you have to know to obtain a fast loan for your restaurant.

1. Determine the business loan types

When looking for fast loans for your restaurant business, you will come across a wide range of funding options. So, you should know all the types before applying for a loan application.

Business Overdraft

This type of financing helps you manage your cash flow for a short time. You can borrow money from both secured and unsecured options.

Business Credit Cards

You can utilize business credit cards to obtain a fast and best bridging loan for your restaurant. It does not require lengthy paperwork as well.

Equipment Finance

You can use this type of fast loan for equipment and machinery purchases. In this, you do not need to offer any collateral to the lender other than the equipment being financed.

2. Determine the amount you will need

After determining the best loan type, you need to decide how much money you will need for your restaurant. As every restaurant has different needs and no one-size-fits-all financial solution, it is imperative to set a budget before the loan application. But, you should remember that you need to ask for only the required amount that you can afford to repay with ease. If the amount you ask is higher than your requirement, the business lenders might reject your loan application.

3. Look at your credit score.

While looking for a fast and best-bridging loan, you need to consider your credit score before approaching a lender. It is a significant step to get rapid business loans for your restaurant. The lender will evaluate your credit report to determine whether you are creditworthy or not. It means credit score works as an eligibility criterion from which the lending institution understands whether you can repay the entire loan amount with interest or not. Thus, consider it to increase the chance of getting fast loans for your restaurant before applying.

4. Determine whether and how you wish to secure the loan

It is another significant and vital consideration you need to make while getting a fast loan for a restaurant. Remember, a secured loan needs collateral like property or equipment. If you default on the loan, the lender can seize these belongings. As a result of this, providing collateral is risky. But it can also help you borrow a lump sum amount from the business lenders at a much more affordable interest rate. Hence, before going to a lender and submitting the loan application, you should decide how you wish to secure the loan.

5. Compare different lenders

When looking for fast business loans for your restaurant, you need to compare different lenders before settling for any. It is vital and beneficial because each lender is different, and as a result, they also have a differences in the loan terms and conditions. If you carefully research and compare, you might get the most affordable loan for your restaurant business with flexible terms and conditions for the loan. Not only this, but you can also get the money faster and use it for your restaurant’s growth.

6. Organize all the documents

It is another way to get fast loans for your restaurant business. Before applying, ensure you have gathered all the necessary and required documents in place. Through this, you can make the loan application process more streamlined. It will also help you to get the loan faster. Below are some of the documents you need to organize before submitting your loan application.

Business and personal tax returns and bank statements.
Business financial statements and legal paperwork, such as franchise agreement, commercial lease, and articles of incorporation.
Business plan and credit report

Reasons why you should apply for fast loans for your restaurant

Starting or renovating your restaurant business
Investing in new machinery or equipment
Opening new branch
Improving the restaurant’s look and feel
Accommodating more guests by adding furniture
Funding operational expenses
Recruiting new employees and professional chefs
Enhancing marketing activities and purchasing decisions.
Rebranding

Wrapping It Up

So these are some crucial considerations you need to contemplate before approaching business lenders. Getting a business loan for a restaurant is not a daunting task if you consider the above factors. So, if you want to make your restaurant unique and successful, take out a business loan now and reap the benefits.

How To Get A Business Loan From Small Business Loan Lenders?

Most small business owners understand the hassle and challenges associated with getting access to additional capital for their business. It is like a high hill that you need to climb without any support. The task is much more difficult when you need some urgent cash injection or you have insufficient money to operate your business.

But in today’s world, securing a loan is not as daunting and nerve-wracking as you imagine. There are many small business loan lenders out there who are willing to offer capital to small business professionals or entrepreneurs. But there are a few key steps also that you need to consider. These will assist you to increase the chances of securing a loan for your business without much hassle.

Small loans for businesses help business owners in many ways. It also assists you to get your business started or expanding, and you can also increase your credit score and save money. Hence, the importance of it is immense. But do you know how to get the funding for your business with ease? Well, if you do not know this, you are in the right place. In this article, we have explained some fundamental and crucial steps that will eventually help you get the money. So, let us start and get some practical advice and insight on the entire process.

Learn about loan types

Before you apply, you need to learn about the loan types. There are multiple options you will get when you look for loans for business. For example, you will come across funding alternatives such as secured business loans, unsecured business loans, equipment loans, and others. Therefore, you need to have a clear idea of all these types to select the best one suitable for your requirement. Hence, it is the first thing you need to do while seeking business capital.

Select the best loan type

As you have learned from the above point, knowing the loan type is necessary to select the best alternative. So, after getting some idea, you should be specific about why you need the money. It will help you determine the loan type perfect for your business needs. For example, if you want to purchase equipment, products, and other things for your business, you need to pick an equipment loan. On the contrary, if you need the money for any purpose, you can opt for other funding alternatives. So, before applying for the funding from business lenders, choose the best option to help you for longer.

Look for multiple lenders

You will find many small business loan lenders when you look for funding for your business. As a result, you need to talk to at least four lenders and evaluate their loan terms and conditions to determine who is best for your needs. Thus, it is a crucial step to follow, as you will not only get the best loan terms with affordable interest rates. You can also have other benefits if you choose the best lender.

Know the lender’s loan approval process

It is imperative when you are deciding on any business lender. If you know how lenders will review your credit score and profile, you can get a step ahead for loan approval. But why so? Well, lenders analyze your credit report, cash flow, outstanding debts, assets, and other things to determine whether you are worthy of the funding or not. They also evaluate whether you can repay the amount with interest on time or not. As a result, if you learn their process, you can rectify your mistakes before applying for the funding. Thus, it is a crucial tip to follow while seeking a small business loan for your business.

Organize your documents

Before applying for a loan, get every document organized to submit to the business loan lenders. The documents include all your financial statements, personal financials, balance sheet, credit report, and others. Besides, the demand for documents varies depending on the lender you select. That is why it is always wise to gather some additional documents like your personal and business tax returns, all bank statements, business plan and legal documents like articles of incorporation, franchise agreement, and commercial lease details. So, keep these things organized to get loan approval quickly.

Determine your assets

Business lenders always look at what asset or collateral you have before considering your loan approval. So, as a borrower, you should have collateral like company equipment, accounts receivable, property, and others. Therefore, before you visit a lender, you need to determine what asset you have. If you can successfully provide valuable collateral to lenders, you will get the funding and also negotiate for some extra capital with flexible terms and conditions. So, it is a crucial and effective way to get business loans.

Consider your ability to repay

While looking for loans for business, you need to consider how much you can afford per month for loan repayment. Most lenders demand monthly payments, and as a result, if you ask for too much capital, you need to stay alert about your capability. For this, you should look at your cash flow or profit, review the loan repayment terms, and do other things carefully. In addition to this, remember that you also need to pay the amount with the applicable interest rate. Therefore, contemplate all these and apply for an amount that you can repay without issue. If you follow this tip, you can also convince the lender and get the loan approval.

End words

So, if you follow the above steps, you can get a decent amount of capital from any reputable small business loan lender. Not only this, but you can also get the best rate with better loan terms and conditions. Therefore, before you settle for a lender and apply for the capital, do some homework, consider the above points, and apply for the funding.

How Should You Compare The Interest Rate Of Small Business Loans?

Small business loans refer to the cash that business owners borrow from a bank, a credit union, or a lender. The borrower can use the money for working capital, real estate, inventory, renovations, asset acquisition, and business acquisition. Running a business can be stressful and lead you to borrow from various finance solutions. To ensure the well-being of the finance of your business, comparing loans is essential to get the best deal. There are many lenders in the market, and one of the deciding factor is the rate of interest they offer.

Points to consider while comparing business loan interest rates:

While repaying, borrowers pay some money added to the principal amount to the business lenders. This extra money is the percentage of the principal amount loaned and is known as interest. The calculation of interest rates depends on the risk factor borne by the lender. The interest rate increases as the risk rises. In Australia, the interest rate generally ranges from 10% to 25% per annum for non-bank financial lenders. The various business interest rate options offered are as follows.

1. Fixed-rate of interest

The borrower has to pay the interest rate each month as fixed. You must pay the exact monthly payments during the entire loan life. Any fluctuation in the cash flow is independent of the number of repayments. Since you know how much to repay each month, you can create a business budget. You also know the overall loan repayment amount.

If, however, the market changes and business lenders offer a lower interest rate, there will be no changes in the fixed-rate mortgage. Also, if the market rates go up, you will still be paying the lower rate fixed earlier. Borrowers get protected against market swings.

2. Variable-rate of interest

The interest rate is variable, and the amount for repayment moves up and down. If the rate falls, repayments will get reduced. If it rises, the repayment amount will also increase. Borrowers will be paying a different payment each month. The monthly payments do not differ widely from one another in a stable economy.

One of the downsides of this interest rate is that payments will increase as the rates go up. Budgeting your business is difficult because you do not know the exact repayment amount until you have repaid everything.

3. Combination rate of interest

Another type of interest rate for private business loans is the combination rate. Here, lenders offer a fixed rate for the first year (or first two years) of repayment tenure. Thus, the rate reverts to the standard rate of interest as applicable. This period is known as the honeymoon loan period.

To select one of the three interest rates, choose the one that will suit your business profile, loan budget, and goals. Those who want to repay the small business loans early should borrow from lenders who will not levy early repayment fees. Sometimes, the lender charges a one-time or a monthly fee for providing the loan. Keep all these factors in your mind while searching for the best deal in the market.

Be prepared with a loan amount and term in your mind while considering a business loan. These factors will help in calculating the interest rates. Borrowers have to pay Equated Monthly Installments or EMIs to the lender. Each EMI contains two parts: the principal borrowed and the accrued interest.

How to decide upon a rate of interest?

The type of interest rate that you can select is dependent upon the needs and the cash flow of your business. When choosing between these private business loans types, you have to decide how much risk you can take. If you want to be predictable about your business expenses monthly and do not want to be vulnerable to market fluctuations, a fixed interest rate is the best way to go. If your business has some breathing room in the monthly expenses, choose a loan with a variable rate. Although it involves a bit of risk, you may get low rates and end up saving money. Choose a variable rate only if your business can tolerate some fluctuations in the monthly budget.

It is a good idea to study the interest rates of various loans to know what you are getting into. Interest rates offered to different businesses vary because business lenders use a variety of factors to calculate them. Some factors include the loan amount, purpose of the loan, tax returns, financial statements, and information about debts and assets. Credit history for business and personal loans, number of loans you applied for before, joint mortgage applications, repayment history of previous loans, and loan terms are some other factors the lenders consider commonly.

The payable interest rate also depends on the way of calculation. Some of the ways are:

Annualized Percentage Rate (APR) :

The calculation includes the lender interest rate and small business loan providing fees. It is the best parameter to get a real-time view of the actual loan cost.

Discount Rate

Invoice factoring companies charge a discount rate and the percentage of the invoice amount getting mortgaged.

Factor Rate

The factor rate is a multiplier applied on unsecured fixed-term loans.

Early Repayment Fees

Some lenders charge early repayment fees to compensate for the loss of interest.

Conclusion

We hope that this article will help you compare the interest rates of private business loans and find the best deal. Remember that the ideal deal will be different for all businesses.

What Are The Different Challenges The Borrowers Face While Applying For Loans For Business?

Starting a business is a great achievement for many people. However, maintaining it is more crucial. As a business owner, you might have to face many business-related challenges. These include employing the best people, devising a brand, developing a business consumer base, and the list goes on.

But besides these, when your business needs urgent money to manage cash flow and other financial issues, you will look for business loans. Again, there may be obstacles in getting the loan. If you have just started your business or have a low credit score, you might face trouble while applying for loans. Here we have listed down some common challenges a borrower faces while applying for loans for business.

Collateral-related challenges

If you are a newcomer in the business industry, you might not have collateral like a property. As a result, you cannot offer it as a guarantee to secure your loan. Due to this, business lenders might not give you the funding. This is because they have no secure assets, and it is risky for them to approve the loan.

Documentation-related challenges

As you might know, every loan application procedure is lengthy as it can require much paperwork. Besides, some loan lenders demand unexpected and unnecessary documents for approving the loan. Hence, if you do not have those papers, chances are you will not qualify for the funding. Therefore, it is one of the significant challenges you might face while seeking a business loan.

Time-related challenges

Applying for a business loan can be a lengthy and time-consuming process. As a result, when your firm needs urgent money, you will feel frustrated.

At first, you need to look for some reputable small business loan lenders
Then by considering several aspects, you need to select the best lender and apply for the required funding.
Next, you need to submit all your documents.

However, the real obstacle begins after all these. When your selected lender verifies your details and double-checks them, chances are they might reject your application. Besides, if they approve, they will continuously call you and ask for many more details. As a result, it takes a lot of time before you get the final approval or rejection. But as you have financial issues, this entire process will affect your firm negatively and impacts your revenue.

Credit history-related challenges

When you apply for business loans, some lenders will look at your credit history. They look at every aspect in detail and it is a factor of loan approval or rejection. It is the biggest challenge as delayed payment or a default affects the credit score significantly and in turn, the credit history. As a result of these, you might not get the capital after days and months of waiting.

Amount-related challenges

Business loan lenders generally are very cautious when it comes to lending. It is so because the risk of business failing is always on their mind. As a result, when they approve the loan, they give a much lower amount than required. They do this to see if your business is performing well and you can repay that amount or not. Therefore, it can be an obstacle as you may not get the required money. You might have to wait for months to obtain a slightly more amount.

Business plan-related challenges

As a business owner, you must have a clear plan of approach and business strategy ready before applying for a loan. The plan should contain all the calculated expenses like your employee salary, inventory purchase expenses. Besides, you should outline the competition, scalability, market size, marketing strategy, product development, cost competitiveness, and entire strategy. But, some business owners forget to enclose these things in their business plan, and when they submit the papers, the lenders reject the application. Hence, it is another significant obstacle you might face while applying for funding, as all lenders verify your plan and strategy before giving you any amount.

Criteria-related challenges

Different lenders have some specific criteria for approving the loan. It indicates that they set various criteria based on your business type, earnings, working capital, and more. Thus, before you apply you must have a knowledge of their requirements, this gives you a higher success rate. As a result, you will get the funding if you can meet their criteria.

Cash flow-related challenges

It is one of the prevalent challenges that many business owners encounter while applying for a business loan. When you struggle to pay bills, chances are you will not get the capital. It is so because the lender checks how you manage the cash flow for your firm. Hence, any inadequacy might reject your loan application.

Interest-related challenges

Suppose your lender approves your loan application. But what if you have to pay a high-interest rate. It is a primary challenge many business owners face while applying for funding as the lender demands a high-interest rate, along with additional charges. Due to this, interest rates are a significant concern for obtaining capital.

Final Thoughts

To wrap up, when you seek a business loan, you may encounter many challenges. Since taking out a loan can be a complicated and lengthy process, you should have patience. Besides, you need to prepare a business strategy to prove that your business can generate more revenue in the future. It will support you to get the trust of the lenders, and chances are they will approve your loan. Besides this, you need to pick a reputable and trustworthy lender to minimize these challenges.

Six Tips For Setting Your Business Up For Success In The New Financial Year

At HomeSec Business finance we offer loans for business purposes however we also like to set ourselves apart from other business lenders by providing useful information to businesses. Managing your finances is an essential component of any company, large or small. It is much more than bookkeeping and balancing company’s account, contrary to popular belief. Entrepreneurs must think about their investments for various reasons, from preparing for survival in bad times to progressing to the next level of success in good times.

The distinction between a company that scales the ladder of success and falls at the first hurdle is excellent and have successful financial management. We’ve put together a list of tried-and-true financial advice that every company should use to keep expanding and succeeding.

Tip To Consider While Setting Up Your Business Successfully

In order to be effective in today’s business world, you must be adaptable and have excellent planning and organizational skills. Many people start a company expecting to turn on their devices or open their doors and immediately make money, only to discover that making money in business is much more complicated than what they expected.

You will prevent this in your business ventures by taking your time and carefully preparing all of the steps required for success. Regardless of the type of company you choose to launch, the following pointers will help you succeed.

Keep an eye on your budget

Creating an annual budget is a crucial move that will enable you to manage your finances over the year efficiently. It is an important step for your business. A budget serves as a compass, allowing you to plan ahead of time for such business decisions. It also aids in the creation of expansion strategies.

Debt Management

Carrying over current-year debts to the next fiscal year is never a good idea for a company. Before you take any loans for business from business lenders, make sure you have a well-thought-out debt reduction plan. It’s also essential to make timely and effective settlement of any unpaid business payments a priority. However there are always options for a small business loan with bad credit.

Increase Your Savings

In a downturn, a contingency investment plan can be an influential asset in your repertoire & arsenal. It will assist you in dealing with adversity and keeping your company afloat. Create a plan to determine whether you have enough savings to cover any future business losses when you plan your budget for the coming financial year. If you are unable to increase your savings don’t forget business lenders will provide loans for business purposes.

Choose the Best Investors

Shareholders can be a valuable asset to your company because they let you to accumulate funds that are more than you will probably ever get from loans. They will assist you in growing your company or sustaining it through difficult times. As a result, choosing the best and right investors is crucial to your company’s success. Before you make a decision, look at the most recent projects of your potential investors and determine how much they would like to be a crucial part of the business.

Keep your credit score in good shape

Various financial agencies, partners, vendors, and potential customers use credit scores to assess a company’s creditworthiness. It provides them a sense of belief & assurance whether you’ll be able to repay your debt or not. Good credit score aids in the establishment of a company’s goodwill.

You will boost your business’s financial performance by maintaining a solid credit score. As a result, it is essential for any company to know how to improve its credit score. Be assured however that there is always options from business lenders for a small business loan with bad credit.

Make it a habit to forecast your finances

Practice to keep an eye on industry dynamics and adjust your financial outlook and business ideas for the year beforehand. This move will assist you in gaining a better picture of where the business stands in the future and allowing you to create a better plan for the company’s growth.

While managing finances is an essential aspect of running a company, it can very well not be the strongest of areas for business owners. If accounting, bookkeeping, and financial management are not your strong suits, you should seek professional assistance. It would be best to employ a professional to do the job instead of procrastinating or wasting too much time thinking about it.

Take some pointers from the above financial advice to help the company succeed in the new financial year.

What is Asset Finance and how will it help to grow your Business?