Purchasing new assets is part and parcel of running a business. From computers and office equipment to delivery vehicles and factory machinery, such items are often crucial to a company’s day-to-day operations, not to mention its growth.
However, there’s no escaping the fact that replacing or buying additional assets can come at significant expense to a small business. Indeed, there’ll be many occasions when a company simply can’t afford to acquire an asset with a one-off payment.
Asset finance is the answer
An alternative to traditional bank loans, asset finance is specifically designed to make asset purchase more affordable for businesses. Quite simply, it lets companies spread the cost of an asset over several months or years; paying it off in small chunks, rather than with a lump sum. In theory, it should allow a business to protect cash flow while continuing to invest in its growth.
Hire purchase is one of the most common forms of asset finance. Similar to when you buy a car “on finance”, it involves purchasing an asset and paying it off in installments over an agreed term. At the end of the term, assuming all payments have been made, you’ll have full ownership of the asset.
Advantages of hire purchase
Like most forms of asset finance, the main advantage of hire purchase is that it allows a company to spread the purchase cost over a long period of time. Most lenders will offer some flexibility over the repayment term and initial deposit, if one is required, meaning a business can tailor a hire purchase agreement to their own financial circumstances. There may even be a choice of fixed payments and seasonal repayments, which will vary depending on a company’s income at certain times of year.
Another advantage of hire purchase is that a business will eventually own the asset, giving it the option to sell it further down the line. This can be a good way of unlocking capital for cash flow, purchasing additional assets, or even part-funding the purchase of a replacement, if the asset in question has become outdated. Assets can also be used to secure other forms of funding, such as business loans.
Disadvantages of hire purchase
In spite of its advantages, there are a few downsides to hire purchase. Because most lenders charge interest on the monthly payments, it’s likely that a business will end up paying more for the asset than its cash price. VAT also tends to be payable upfront, as well as a deposit.
Additionally, hire purchase may not be the best option for companies that only need an asset for a short period of time. While there is flexibility over repayment terms, it can be more expensive to pay for an asset over a shorter term, which might make leasing a better option in such cases. Finally, the value of an asset usually depreciates with time, so it’s unlikely you’ll be able to sell it at the same price – or higher – once you own it.
Asset purchases made easy
Fleximize offers a convenient alternative to asset finance. With our fast, flexible business loans, companies can take immediate ownership of an asset and repay over a term of up to 48 months. There are no hidden fees or early-repayment penalties, and we’ll even recalculate the interest if you settle early, so you’ll only pay for the time you had the funding. Here’s a summary of what we offer:
- Business loans of £5,000 – £500,000
- Flexible repayment terms of 1 – 48 months
- Speedy application with minimal paperwork
- Approval and deposit in as little as 48 hours
- No hidden fees or early-repayment penalties
- Interest charged on a reducing balance, not the total loan amount
- Repayment holidays and top-ups available with all loans
We understand the challenges that small businesses face, which is why we don’t apply the strict lending criteria of banks. Not only do we look for a way to say “yes” to every business, but we tailor our loans to suit the unique needs of each client.
Hundreds of businesses have chosen Fleximize to fund an asset purchase, whether it’s a commercial printer or mash tun for a brewery. Here are just some of the assets you could buy using a loan from Fleximize:
Apply for asset finance
Applying with Fleximize is incredibly simple – just click the button below and fill out our short application form. If you pass our initial checks, a member of the team will be in touch to guide you through the final stages. Alternatively, feel free to give us a call on 020 7100 0110 or check out our FAQs page if you have any questions. We’re here to help.