Asset Refinance

What is Asset Refinance?

Asset refinance is a financial strategy that allows businesses to unlock cash tied up in existing assets. By using owned equipment or vehicles as collateral, companies can obtain funds to reinvest in growth, manage cash flow, or cover unexpected expenses. This approach provides a valuable source of liquidity without the need for additional borrowing, making it an attractive option for many businesses.

How Does Asset Refinance Work?

Initial Assessment

The asset refinance process begins with an assessment of your existing assets, such as machinery, vehicles, or property. A finance broker or lender will evaluate the asset’s current market value and determine how much cash can be released.

Refinancing Agreement

Once the asset’s value is established, you enter into a refinancing agreement with a lender. This agreement outlines the terms, including the amount you will receive, interest rates, repayment schedules, and any associated fees. The lender will retain a charge over the asset until the refinancing agreement is fulfilled.

Cash Release

After the agreement is finalised, the lender provides you with the agreed-upon funds. You can use this cash for various purposes, such as investing in new equipment, expanding operations, or improving working capital. The asset continues to be used by your business while you make regular payments to the lender.

Benefits of Asset Refinance

Improved Cash Flow

One of the primary advantages of asset refinance is enhanced cash flow. By unlocking the value of your assets, you gain immediate access to cash, allowing you to invest in growth opportunities or manage day-to-day expenses more effectively.

Flexibility

Asset refinance provides flexibility in how you utilise the funds. Whether you need to purchase new equipment, cover unexpected costs, or invest in marketing, the cash released can be tailored to your specific business needs.

Retain Use of Assets

With asset refinance, you can continue using the assets that are generating income for your business. This allows for uninterrupted operations while benefiting from the liquidity gained through refinancing.

Types of Assets You Can Refinance

Asset refinance can be applied to a variety of assets, including:

• Machinery: Industrial equipment, tools, and production machinery.
• Vehicles: Cars, vans, trucks, and other transportation assets.
• Property: Commercial real estate or land owned by the business.

Eligibility Criteria

Business Type

Asset refinance is available to various business structures, including sole traders, partnerships, and limited companies. Lenders assess eligibility based on the financial health of your business and the value of the assets.

Credit Assessment

Before approving asset refinance, lenders will conduct a credit assessment to evaluate your creditworthiness. This assessment includes a review of your credit history, financial statements, and cash flow to determine your ability to meet repayment obligations.

Application Process

Step 1: Consultation

Start by discussing your refinancing needs with a finance broker or lender. They can help you assess your assets and explore suitable refinancing options tailored to your business.

Step 2: Application

Complete the required documentation, providing details about your business, the assets you wish to refinance, and your financial situation.

Step 3: Approval

The lender reviews your application, assessing the asset’s value and your creditworthiness. If approved, they will present you with an offer detailing the terms of the refinancing agreement.

Step 4: Agreement and Funding

Once you accept the offer, you will sign the refinancing agreement. The lender then releases the agreed-upon funds, allowing you to utilize the cash while continuing to use the assets.

Conclusion

Asset refinance is a strategic solution for businesses looking to unlock cash from existing assets while retaining their use. With benefits such as improved cash flow, flexibility, and the ability to continue operations, it can be an effective way to manage finances and support growth. If you’re considering Asset Refinance for your business, consulting with us at Best Asset Finance so we can help you navigate the process and secure the best terms tailored to your needs.

‍