5 Simple Steps to Asset Finance for Businesses

A business cannot survive, let alone thrive in absence of adequate equipment to facilitate and streamline the day-to-day operations. Nowadays, even a home-grown business needs a computer with specific software to manage operations. Whether you are a handyman, a cleaning service, or a manufacturing unit, accommodating the customers’ needs demands the right equipment. But, buying equipment or machinery is easier said than done. They can be expensive, and not all business owners have the cash reserves to buy them upfront. That’s where you can get funding assistance from asset finance in Australia.

Define Asset Finance 

An asset can be anything from machinery (milling and drilling machines) and equipment (forklifts) to vehicles (trailers, tractors, excavators, earthmovers, etc.), provided you use it for business purposes. Asset finance is the funding that you acquire to buy them. It allows a business owner to secure up to 100% of the asset’s value at a fixed rate and loan term. The borrower pays periodically to repay the loan.

With asset finance, you do not have to peg any other security against the funding like real estate because the asset acts as the collateral for such financing solutions. Asset finance is beneficial to SMEs because it helps them grow and expand by utilizing the equipment while repaying it comfortably without depleting the capital.   

Steps to Apply for Asset Finance

If it is your first time applying for asset finance, then here are a few simple steps to follow:

1. Research

Research is the key to nailing business finance. You need at least a standard knowledge of asset finance and how it works. This will also help you in the later stages of loan application when you look for a finance broker or a lender to facilitate the loan.

2. Documentation

What kind of documents do you need to apply for asset finance? Understanding documentation is the key to your approval. Here is the standard set of financial and other documents you need for asset finance in Australia:

• Identity proof
• Bank statements
• Balance sheet
• Cash flow documents
• Profit/loss statements

You might need additional business documents. It usually varies from one lender to another.

3. Type of Asset Finance

There are different types of financing for asset purchases, primarily determined by the asset you are buying. Is it a vehicle? Is it equipment or a machine? What is the cost of the asset? All of these factors play a role in choosing the kind of asset finance. You can choose from:

• Chattel mortgages
• Hire purchase
• Finance lease
• Operating lease
• Novated lease

A professional finance broker can help you make the choice.

4. Finance Broker & Lender

You can either seek a lender or a finance broker. We recommend going for the latter. Why? That is because searching for the right lender can be stressful and time-consuming. There are so many things that need corroborating, which a business owner can hardly afford. When you hire a finance broker, the professional will go through your financial statements and requirements and match you with the right lender.

5. Apply for Asset Finance

Once all of the above steps are complete, you can apply for asset finance. With everything in place, you should get approval within 24 hours, followed by funds to buy the asset.  

Conclusion

Make sure that you get in touch with a trusted finance broker who can facilitate your application for asset finance through a credible lender. A reputable broker will not only be able to get you an appropriate lender but will also make sure that you get flexible loan terms and rates as per your financial ability.