Business Asset Finance: Finance Lease

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What is business lease finance?

A business lease finance is a way of acquiring business assets where they remain the property of the finance provider. So it is simply a way of loaning equipment for your business over a contracted period.

  • Contract agreed
  • Business loans the asset
  • Contract ends
  • Asset is returned to the lender

Who can use business lease finance?

Almost any business, small or large, in any industry can apply for business lease finance. Lease finance is usually used to loan vehicles such as cars and vans to businesses to maximise their potential.

Industries that benefit from leasing

Every industry can benefit from leasing finance as long as there are asset requirements.

  • Medical
  • Catering
  • Construction
  • Manufacturing
  • Transportation
  • Agricultural
  • Education
  • Technology
  • Professional Services
  • Entertainment

Assets that can be leased

Almost any asset can be leased using business lease finance. Of course, the assets you may require depends on the industry or sector your business is in. Some examples of business lease financed assets:

  • Cars
  • Vans
  • Office equipment (PCs, printers etc)
  • Manufacturing machinery
  • Catering equipment
  • Medical equipment
  • Construction vehicles
  • Construction machinery

Why are the agreements more flexible compared to other asset financing options?

Because this is a form of loaning equipment and the asset is not transferred into the businesses' possession, most lenders are able to create flexible instalment plans so that businesses have the choice whether to spread the cost of the finance over instalments or whether they would prefer to pay a lump sum at the end of the contract.

Examples:

Lump sum paid upfront - smaller instalments required for contract term - no outstanding sum at end of contract

No lump sum paid upfront - larger instalments paid for contract term - no sum outstanding at the end of contract

No lump sum paid upfront - smaller instalments paid for contract term - lump sum required at end of contract term

What happens at the end of a business lease finance contract?

At the end of a lease finance agreement, a business is then required to return the loaned asset. If a business wishes to continue using the asset, then a new contract can be agreed with the lender. In some cases, if the asset is no longer required and is sold, the business is entitled to a portion of the resale value.

Asset still required - New contract agreed with lender
Asset no longer required - Asset returned
Asset no longer required - In some cases, when the asset is sold the business acquires a share of sale value

Pros and Cons

  • Fixed instalments for easy budgeting
  • Flexible agreements
  • Doesn’t drain day-to-day capital by buying asset outright
  • Customer usually responsible for asset maintenance
  • If vehicle, they sometimes have mileage caps
  • Asset never becomes businesses possession

Tax Advantage

It is worth noting that if you are a VAT registered business, this business asset finance option typically has the opportunity for VAT reclaim. This can be as much as 50% VAT on vehicle lease agreements.

Find out more about this finance option at Holmesdale Asset Finance, Get in touch today!

Call 03451 303030 and let's talk options.

OR Request a callback. We can help you secure assets from £7.5k up to £500k.

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