From $9,000 to $90 million (you can release up to 100% of the value of your assets)
Up to 10 years (depending on the asset's working life)
Depends on the type of asset, its condition and age, and whether it's wholly or partially owned by your business
To improve short-term cash flow or to release working capital in order to buy new assets
Any business with valuable assets
Asset refinancing is a way you can unlock cash from items your business already owns (or partially owns). You can secure a loan with e.g. commercial property, equipment or vehicles. It’s common to use asset refinance in combination with other types of finance such as invoice finance.
Asset refinancing might be a suitable option if your business is asset-rich but cash-poor. It allows you to access a cash lump sum using the value of assets already on your balance sheet. You may want to buy – or put down a deposit on – a new piece of equipment or you may simply want to ease cash flow.
A key advantage of asset refinancing is that you don’t need to own the asset outright. Lenders will look at the equity (share) you currently have in the asset. For example if you obtained equipment on a hire purchase agreement and have some money left to pay (to the hire purchase provider), you can still raise finance against this (partially owned) asset. The new lender will usually pay off your original lender (in this case the hire purchase company) and give you a lump sum based on the equity you have in the asset.
In other words, you transfer ownership to the new lender while you continue to use the asset, effectively leasing it them with monthly payments. This is why asset refinance is also known as a sale and leaseback agreement. Asset refinance agreements are usually provided on a finance lease or lease/hire purchase agreement.
Once the agreement ends, ownership usually reverts back to your business. If you don’t keep up payments, the new lender will take the asset to recoup what you owe.
The amount a lender is prepared to advance depends on the type of asset, its condition, its age and the percentage you own (equity).
Asset refinance is different to asset finance, which is a type of lending that gives you access to additional business assets.