Asset and equipment finance in NZ

 

If you are looking to invest in a large piece of equipment but do not want to maximize your lending limits, asset finance may be an option for you. A viable alternative to more traditional forms of lending, the features of asset finance may warrant consideration when new financing arrangements are being structured.

How asset finance works

Asset finance is a means of obtaining assets for your business without using existing business capital. The assets are used as security for the loan which means that in many cases, the asset finance does not impact the business’s other credit lines.

An alternative to asset finance may be asset rental. In this case, the financier purchases the asset and leases it to the business. This may be appropriate for assets that quickly depreciate in value or need frequent upgrading, such as computers.

The benefits of asset finance

1. In most cases, the asset being purchased will provide the loan security, allowing the remaining assets to be used for other credit lines

 2. The asset finance can be tailored to match the life of the asset and payments can be scheduled to align with its ability to generate cash flows for your business

3. Similarly, loan repayments can also be structured to match seasonal variations in your business’s cash flow

Who might consider asset finance?

Businesses with expensive equipment requirements, particularly those that require this equipment to help their business grow, can benefit from asset finance. It can also assist businesses that have seasonal fluctuations in their cash flow as the asset finance terms can be more flexible than a traditional lending product.