How Does Business Asset Funding Work?
There are two types of loan that feature this title and fortunately, both are fairly similar. In the first case, a business can approach a lender with the aim being to receive cash from them to cover the value of an asset that will be put to use within their business. If they keep up with their repayments (and as long as the lender has approved the loan), the borrower will take full ownership of the purchased product once they have reached the end of their repayment plan.
If they don’t keep up with their repayments, then the asset/s will be seized by the lending company and the business will have a mark struck against their name (which can make it difficult for them to borrow again), as well as a ban from the lending agencies services
The other type of business asset financing relies on the companies’ access to their own assets that can be put up for use as collateral in order to secure a loan. This is why some funding plans are referred to as ‘secured loans’ because they rely on the financial capabilities and values of a companies’ assets in order to protect a lender from experiencing a loss – just in case anything goes wrong.
In order to be eligible for business asset finance, a company must be able to prove that it’s been in operation (and earning for at least 11 or 12 months, depending on the lender’s policies), as well as bringing in net earnings of at least $100,000 AUD. Some lenders might propose terms of $120,000 AUD as the minimum, but when hiring a good finance broker, these conditions can be negotiated until they are fairer for the borrower.
In any event, business asset financing options are a great way for a company to purchase the types of products and accessories that they are in need of, and as these assets can be bought as soon as the funding is received; there’s no reason why the products, vehicles, or equipment couldn’t be put to good use as soon as needed.