3 Reasons For Asset Refinancing
Asset refinancing is often overlooked as an option for funding business cash flow. It can be a simple and fast way to inject cash into your business.
Possible reasons to refinance an asset include:
- Inject cash into your business to see you through difficult times or seasonal dips in cash flow.
- Use the money to reinvest in more equipment that could generate further income for your business.
- You may wish to expand your business.
In basic terms, asset refinancing is comparable to remortgaging a property as you are borrowing money that is secured against a specific asset. This could be almost any asset, from tractors to combine harvesters and potentially any other machinery that has a significant current value.
As a general rule the finance costs are higher than normal business lending but lower than unsecured loans. It is however very important that you check the small print on this type of arrangement and use a reputable provider. We do hear of arrangements where the cost has been much higher than expected often as a result of final or termination charges.
If you are not sure, always get another opinion. Please contact us if you would like advice.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.