Asset-Refinancing

How asset refinancing can help your business

Asset refinance enables you to obtain a lump sum of cash by leveraging the equity value of assets already listed on your balance sheet. This proves beneficial if you intend to make a deposit on new equipment or seek to improve cash flow and enhance working capital.

It’s possible to refinance an asset even if your business doesn’t own it entirely. The amount of equity available plays a crucial role in determining the potential borrowing against the asset, especially if it is not wholly owned by your business.

 

How does asset refinance work?

Also known as a sale and leaseback arrangement, the lender assesses the remaining equity in the asset and offers a percentage of this value as a lump sum. If you own the asset entirely, a higher percentage may be borrowable.

For partially owned assets, the refinance company settles your original lender, providing the lump sum under the agreed terms. The proportion a lender is willing to advance is influenced by factors such as the asset type, condition, and age.

Repayments are determined by the anticipated income generated from the asset, and the refinancing period typically spans five years, tailored to your business needs. At the agreement’s conclusion, ownership typically returns to your business.

 

Is asset refinance a good option for your business?

Asset refinancing could be a viable choice if your business possesses valuable assets but faces a shortage of cash. By leveraging the value of assets on your balance sheet, this approach frees up essential working capital, supporting sustainable business growth.

Whether you need cash to acquire several smaller assets, especially those unavailable through hire purchase or lease arrangements, or require an injection to enhance working capital or address unexpected cash shortages, asset refinance proves beneficial.

It offers an additional line of credit without impacting existing bank financing and is independent of your credit rating or business performance.

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What are the advantages of asset refinancing?

  • Your business retains uninterrupted use of the asset, provided you adhere to the lender’s terms and conditions.
  • Effective budgeting is possible due to fixed financing terms.
  • The lump sum injection enhances your cash flow.
  • Ownership of the asset is restored at the term’s conclusion.
  • If you are ineligible for an unsecured commercial loan, asset refinancing provides a straightforward alternative.


The temporary loss of ownership during the loan term might be considered a drawback. However, since ownership returns to your business at the agreement’s conclusion, this may not pose a significant issue. 

For more information on asset refinance and its potential benefits for your business, Vanguard Insolvency is here to assist. As commercial finance experts, we ensure you comprehend all available options. Please contact one of our team members to discuss your requirements and schedule a free initial consultation.

David Jackson MD
Senior Partner at Vanguard Insolvency Practitioners | Website

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.