At Shore Asset Finance, we can help business owners harness the power of asset finance to Shore up their business growth.
Using finance to purchase assets not only helps to preserve cashflow, but allows business to purchase more reliable equipment, and acts an alternative to hiring equipment.
Asset finance can help you to improve the quality of asset your business is able to purchase and the longevity of the asset within your business.
We have included below some useful guidance when considering using asset finance to propel your business growth.
Earnings vs Finance
Spreading the cost for up to 7 years, can help a business meet the earning potential of the vehicle and future budget requirements.
An optional balloon payment is a common way of minimising a monthly payment whilst taking advantage of the future value of the asset. The lender will consider annual mileage and industry to determine a balloon payment for the finance agreement.
Most finance agreements are a fixed interest rate which provides certainty of the monthly payment for the entire finance period.
VAT
If you have found a suitable asset but are worried about how to fund the VAT due, then you will be pleased to hear that there are options available.
Hire Purchase, a VAT-registered business can reclaim the VAT in full in the same period that they purchase the vehicle.
VAT Deferrals are a useful tool to reclaim VAT from HMRC before paying to the lender up to 4 months later. Giving time to process the VAT reclaim and removing cashflow pressure.
Using a Finance Lease – The lender will pay the supplier in full, with the VAT becoming payable on a monthly basis, reducing large upfront cost.
VAT reclaimable determined by your VAT registration status. Speak to your trusted tax adviser for more information.
Ownership
If you are worried about being stuck with the asset or having to adhere to strict return conditions, then you don’t have to worry.
Hire purchase, the business can own the equipment on their final payment, with their option to purchase fee collected automatically. With no mileage or return conditions applicable.
Finance lease allows sole use of the vehicle or equipment during the finance term, with the ability to benefit from the sale proceeds at the end of the finance period.
Early Settlement
The most popular question posed by our customers is will I be charged to settle early? And the simple answer is No.
It is generally recommended not to settle your asset finance agreement within the first 12 months as the total interest due on the agreement is front-loaded. However, a lender will typically discount an interest rebate at settlement, saving you interest versus running the full term of the agreement.
Tax
The Annual Investment Allowance (AIA) is currently £1m. You can deduct the full value of qualifying assets from your profits before tax. The finance product that allows you to take full advantage of this allowance is Hire Purchase.
The annual interest payable is also offset against your future profits within each financial year of the finance agreement.
Alternatively, leasing payments are 100% deductible against your future profits within the financial year that they are repaid.
Various Funding Avenues
Through our qualified experience and an established lending panel, we help businesses make decisions quickly and obtain the funding they require to fulfil their asset requirements.
Interested in finding out more?
At Shore we get to know your business and find solutions for your unique business needs.
If you want to explore the finance solutions suited to your business, please get in touch
Check out how we recently assisted a company with their vehicle purchase here
