Asset Refinance

Last updated: 21/09/2024

Asset Refinance for UK businesses

Asset refinance allows businesses in the UK to unlock capital tied up in existing assets. This approach can be particularly beneficial for businesses seeking to improve cash flow or invest in growth without incurring new debt. Asset refinance offers a flexible solution, allowing businesses to leverage their owned assets to unlock cash.

Asset refinance can be a valuable tool for businesses seeking to raise capital. Refinancing involves using existing assets, like equipment or machinery, as collateral to secure a loan or release equity. This allows businesses to access funds for various purposes, including investments, working capital, or debt consolidation, while still retaining the use of the assets.

At MAF Finance Group, our experienced team works with a wide network of funders to secure the best possible refinance terms for your business.

What is Asset Refinance?

Asset refinance, also known as sale and leaseback, is a finance strategy where a business unlocks cash from an asset it already owns. The business essentially sells the asset to a lender and then leases it back, allowing them to continue using the asset while receiving a lump sum of cash. This cash can be used for various purposes like investing in other assets, improving cash flow, or paying off existing debt.

Asset refinancing allows your business to improve cashflow by using the equity built up in assets already on your balance sheet.

We will obtain an up-to-date valuation on the assets you hold to establish the level of capital we can raise against your assets (after settling any existing debt).

The more equity you have in an asset, the more capital you may be able to raise against it.

With asset refinancing, we can help you reduce your monthly payments and help you raise capital to purchase new assets, pay deposits for new assets, or make new company acquisitions.

How does asset refinance work?

Step 1 - The funder will establish how much equity remains in your asset and will offer a percentage of the figure as a lump sum to your business, before taking ownership of the asset it is that you are refinancing.

Step 2 - If you only own part of the asset, the funder will pay off the original funder and then advance the lump sum under pre-agreed terms. The amount advanced depends on the asset type, condition and age. 

Step 3 - Asset refinancing typically takes place over various term lengths, it depends on your business type, time trading and a few other parameters. Once the agreement ends, ownership of the asset will usually revert to your business.

Why use asset refinance?

Asset refinancing may be a suitable option if your business is asset-rich but cash-poor. For example, if your business has £3m worth of assets but very little in cash reserves within the business.  

Leveraging the value of your balance sheet assets in this way releases valuable working capital and could help your business grow.  

Asset refinance would also be worth considering if you want a cash injection to boost working capital, or to cover an unexpected cash shortfall or costs. 

Advantages of asset refinance

There are a number of advantages to using asset refinance as a way of unlocking working capital which include:

• A quick injection into your cash flow.

• You regain ownership of the asset at the end of the term.

• Restructuring all your existing debt can reduce your current monthly repayments.

• If you are not eligible for an unsecured loan, asset refinancing offers an alternative.

The process of refinancing an asset

· You own the assets: You contact us and tell us that you want to raise capital  and have equipment that you own and want to refinance. We then contact one of our many funders who will then offer a valuation of the equipment by using the details of the asset that you provide - make, model, hours worked/mileage etc.

· Valuation of the assets: We can lend up to 100% of the valuation, though this depends on your business, the chosen funder and your business credit rating. For example, if the funder states that the machine is worth £100,000, we may be able to arrange funding for you for that amount against that machine.

· Quote and documentation: We then offer you a quote and if you're happy, we proceed to get you credit approved and issue all required documentation for the deal.

· Funds are released: Once everything is approved, the funder releases the funds and you begin paying your monthly instalments on the pre-agreed dates.

Things to consider for asset refinance

Some things to consider before proceeding with asset refinance are:

Ownership: You aren't selling the asset. You'll make monthly instalments and own it at the end of the agreement.

Sale: If you've bought an asset in the last 3 months, you could still refinance by 'selling' it to a funder and buying it back.

Reason: Even if you have an asset on a hire purchase agreement, you could still refinance it, depending on the equity.

Payments: Reduce monthly debt commitments or consolidate debt with lower interest rates, reducing your interest burden.

 How to apply for asset refinance

MAF Finance Group can compare finance offerings from a wide panel of lenders to find the best option for you.

If you would like to get a quote or need further information, simply fill in the form and we will contact you. If you want to speak to someone directly, you can call us on 0115 958 6872 and a member of our team will be happy to speak to you. Alternatively, email us at [email protected].