Asset finance is a popular way for businesses to obtain the equipment they need to grow, says Close Brothers Asset Finance, with common products being:

  • Hire Purchase (HP) allows the customer to buy the equipment on credit. The finance company purchases the asset on behalf of the customer and owns the asset until the final instalment is paid, at which point the customer is given the option to buy it.
  • Refinancing (capital release): The finance company purchases the asset and finances it back to the ‘business’. Repayments are calculated in line with the income stream that will be generated by the asset – at the end of the refinance term, the business owns the asset.
  • Finance lease: The full value of the equipment is repaid to the finance company, plus interest, over the lease period. At the end of the term, the company can choose to: continue to use the asset by entering a secondary rental period; sell the asset and keep a portion of the income from the sale; or return it.
  • Operating lease: Similar to a finance lease, an operating lease allows the business to rent the asset from the finance provider while they need it. The key difference between the two is that an operating lease is only for part of the asset’s useful life.

This means the business pays a reduced rental because the cost is based on the difference between the asset’s original purchase price and its residual value at the end of the agreement.

Types of assets financed

The beauty of asset finance, states Close Brothers, is its flexibility – it can be used to fund any asset, including CNC routers, sanders, moulders, saws, edgebanders, planers, jointers, mortisers, milling machines and drill presses. There is very little that Close Brothers Asset Finance will not consider financing.

The business can even help with the refurbishment of assets – for example, where it pays the refit costs by taking security of an asset to aid cashflow, via Sale & HP Back.

It makes the otherwise unaffordable affordable, because it gives businesses access to the equipment they need without incurring the cash flow disadvantage of an outright purchase. Agreements can also be customised to the business’ needs, with flexibility on both the term and repayment schedule.

Why Close Brothers Asset Finance?

Close Brothers says it is the largest, most successful and longest-established specialist asset finance funder in the UK, with over 30 years’ experience working with SMEs through all economic cycles – there is very little the business has not seen or experienced!

Its team of finance specialists – many of whom have relevant sector experience themselves – work with businesses across the UK to provide funding for both new and used equipment. As sector experts, they understand how vital it is that a business has the right equipment – so can be of help to those looking to expand or replace their range of equipment.