When small or mid-sized businesses obtain cash loan by pledging their asset in exchange then this type of finance is called asset-based finance. There are lending companies which can arrange finance as working capital for businesses against the pledge of inventories or accounts receivable. This form of financing is among the best short term loans in London which varies from other conventional methods but often the time frame of the loan is short.
The cash obtained from asset financing option can be employed in variety of scenarios to deal with the fiscal needs of the business. Noticeably the most common approach in asset finance is to extend loans against accounts receivable. Besides this, lending against inventories is the other trend that is gaining popularity these days. Loan providers have the right to cease or sell the collateral in case of any repayment default.
Finance lease and operating lease
What is your business revenue currently?
How much capital you require?
Do you want your personal asset to provide as security or not?
For how long you need the equipment?
Would you need to upgrade the equipments?
Delving upon the advantages and disadvantages of asset finance would help you understand whether it’s a good option for your business’s financing needs or not.
It’s more expensive than buying the asset.
Sometime it’s required to make some payment deposit at the start.
It’s often difficult to cancel the asset finance contract earlier.
Depending upon ones financial standing there can be a need of additional security.