Asset refinance is a powerful way of raising cash for a business in a short timescale, often within days. This makes asset refinance especially useful when a company is experiencing difficulty accessing other forms of finance which is proving to be the case during the last two ‘credit crunch’ years.

Some examples where asset refinancing has helped businesses are provided below:

A print production company was asset rich but was experiencing cash flow problems in the volatile business environment at the time. The broker helped the company use asset refinance to release hundreds of thousands of pounds of cash which made a huge difference to the working capital available to the business.

A transport business had won a new contract which meant that it needed additional vehicles. Asset refinance was used in the form of a sale and lease back agreement to refinance the existing fleet of coaches and release the cash required for the deposits on the additional vehicles.

An engineering business owned most of its existing assets but its existing bankers were not prepared to extend the existing funding to the business via additional loans or overdraft facilities. Asset refinance was used to release cash for the purchase of additional production machinery.  The decision to refinance plant and machinery proved to be a flexible solution for the business which maximised the value already present in the existing assets.

Our brokers are regularly asked to help businesses when they need to refinance existing assets.  Contact us for a quote when you need equipment funding.
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Many businesses are not aware that they may be able perform a lease refinance to raise cash to help ease their working capital requirements or to generate cash to help fund the purchase of additional equipment that they may need.

How does lease refinancing work?

In a simplistic scenario to perform a lease refinance you need to be in a position where the asset being refinanced is ‘unencumbured’. This is a legal term which essentially means that no other entity has a charge or claim over the asset in question, which normally is the position when the asset is owned outright by the business. Clearly this would not be the case as you are only part way through the existing lease and the existing finance provider will have some form of security over the asset, so a mechanism is required for the existing lease to be cleared as show below.

If an asset is already subject to a lease then the process to perform a lease refinance is for the new finance company to undertake a valuation of the asset and put forward a quote with a new payment schedule, assuming that they settle the existing lease and immediately refinance the lease without the asset leaving your business.

Our brokers have good contacts with finance providers who are willing to consider lease refinancing. Request a quote and we will determine the best equipment leasing solution for you.
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Many of our clients are finding that a sensible way of releasing cash for this business is to refinance existing assets that they already own. Many of the finance companies on the market are willing to refinance plant and machinery and other assets which are paid for already or have a reasonable level of value in excess of the existing loans for that equipment.

Refinancing plant and machinery is generally done on the basis that the equipment is durable, identifiable, and moveable.

Most equipment can be refinanced ranging from general plant and machinery, commercial vehicles, buses through to specialised production line machinery. The cash generated by the plant finance can then be used for any business purpose as required. This can include short term working capital which is especially useful when the banks are restricting access to further overdraft facilities or loans. Alternatively you may choose to invest the funds in purchasing other items of plant and machinery.
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There are several methods of refinancing available:

Sale & Lease Back. In this case the plant and machinery is sold to the finance company by the current owner and then rented back to the seller for an agreed period of time according to an agreed regular payment schedule.

Sale & Hire Purchase Back. The plant and machinery is sold to the finance company by the current owner and then re-purchased by the seller over an agreed period of time according to an agreed regular payment schedule.

Loan & Chattel Mortgage. The finance company lends to the owning company (ie your company), with the security taken in the form of a chattel mortgage over the asset concerned.

Our brokers are experienced in refinancing plant and machinery and regularly put in place these types of agreements.