• Danny Nota

Alternative Finance: Asset refinancing for small businesses

In the first of our Alternative Finance series, we look at the option of asset refinancing for your business.

What is asset refinancing?

Asset refinancing enables you to access a cash lump sum using the equity value of your already-owned assets to free up working capital for other business needs. This is increasingly an option for businesses that are asset-rich but cash-poor at any given time. In particular, in times of crisis, this is a solution to release cash tied up in the business.

How does asset refinancing work?

A lender looks to first establish the available equity offered in the asset, usually a piece of equipment or machinery. You can also look to release cash against other assets such as stock or property. The lender is then able to offer a percentage of the asset's value to the business as a lump sum. Repayments are then paid by the business to the lender for the specified term.

Is asset refinancing right for my business?

Asset refinancing is a viable option to obtain liquid cash for your business. It provides you with a line of credit that does not rely on credit rating or business performance and also does not affect any existing bank financing. You may need the cash to purchase stock or assets in order to grow your business. Or, looking for a cash injection to cover an unexpected cash shortfall in the business.

What are the advantages of asset refinancing?

  • Your business can continue using the asset, as long as the lender's terms are met.

  • A cash lump sum can help with short-term needs of the business.

  • At the end of the term, you regain ownership of the asset.

  • It offers an alternative finance method if you are not eligible for an unsecured loan, or in times of crisis when lenders are tightening their belts.

Next steps

It is important to fully assess whether asset refinancing is right for you and your business. If you would like to discuss your options further, please contact us here at AssetLend. We are able to advise on all aspects of asset refinancing to make sure it is the right option for you and to help you obtain favourable terms with a lender.

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