How To Finance Assets & Equipment Quickly

unsecured business financeHow To Finance Assets & Equipment Quickly

We recently asked a selection of clients what their number one priority was when raising finance. The top response was speed of decision and how quickly they could move forward.

One of the quickest forms of business finance is the unsecured business loan.

These days there are several lenders who will provide a same day decision and offer unsecured business loans up to £250k with some going as high as £500k. Unsecured business loans have been increasingly popular among SMEs due to their accessibility and flexibility. Many businesses prefer unsecured loans because they don’t require collateral, which includes any lein over an asset or piece of equipment.

Bear in mind that incorporated businesses can obtain a the benefit of full expensing of the asset value in year one then it makes replacing those laptops, printer or expanding the workforce even more appealing.

How Does Applying Work?

Let me tell you a secret… The way unsecured business loans are underwritten changes depending on how much you are borrowing and for what purpose you are borrowing.

If you are borrowing to pay tax, whether it be PAYE, VAT or Corporation Tax then you are better off using a specialist tax lender, for working capital, assets and equipment or another purpose then here are some tips:

  • If you are borrowing less than £100k then the decision is usually quicker and requires less paperwork
  • Some lenders use net profit as a mark of affordability, others use net cash – Yes, there is a difference and knowing which is better for you can influence which lender to use
  • Whenabouts you apply can make a difference depending on whereabouts you are within your trading year
  • Where a lending proposal is borderline in being a yes/no decision, some lenders will use the Government backed Growth Guarantee Scheme to support the application and this can work in your favour
  • Your bank statements play a key role. Depending on what the bank statements look like can influence how much you decide to apply for and whether you then split that lending between funders
  • If you use unsecured finance to purchase an asset or equipment then remember that the equipment is then lein free and you could, if you wanted to, use that asset to raise capital on in the future

Tax Implications

Bear in mind that however you choose to finance an asset please speak to your accountant first. Every business has nuances which influence the best way to do things. You will also want to let your accountant know what you have purchased to ensure you receive the benefit of full expensing of the asset and reduce your corporation tax as a result.

Summary

The bottom line with unsecured business lending is that it is:

  • Quick to get a decision
  • Gives you cash in your account fast
  • Doesn’t require any property valuation or legal work
  • Is not secured by a charge over any asset or property

For more details then please get in touch or you can download the pdf guide here.

By Dave Farmer