Make sure you know what kind of asset finance you need so you can best prepare all your information for a successful asset finance application.
Lenders are often constrained to credit scores and other lending criteria when deciding on finance options. However with asset finance, lending is often viewed as safer due to the inherited security of the asset being financed. However it is still important to ensure that all your finances are presented in the right way when applying for finance.
Identify exactly what your business needs
Depending on your business need – and whether it is a start-up, expanding or in need of freeing up cash – can dictate the type of finance you need. It could be invoice finance, bridging finance, merchant cash advance, bank loans or asset finance.
Look at more than one lender
While some types of equipment can be provided by multiple lenders, other, specialist, machinery might only be offered by a few. Always make sure you do your homework. Consult and compare with what each provider is offering. The ultimate test is whether it provides you with the right equipment that best meets your needs.
Read the small print
As with any other financial agreement, asset finance will come with plenty of small print. Financial products love to come wrapped up in cosy layers of financial jargon. Be aware that many points actually say the same thing but use different ways to explain it. Always ask questions to make sure you understand exactly what is involved when you sign (even if this means using a red pen to annotate your copy of the agreement form with your notes and explanations of what each section means for you and your business).
Provide the right (all) information
Since 2008 lending criteria have toughened up somewhat so alongside the standard asset finance information boxes you fill in make sure you include all additional details that might be required. This may or may not include the following, but it will be to your benefit to have all this information ready if the need arises during your application:
Company details
- What industry your business operates in including background and customer numbers
- Who owns the company?
- A clear idea of your management and financial team.
Asset particulars
- How you will use your leased asset
- What term do you expect to need to pay
- Is there security in any equipment the funding is for?
- What level of financial commitment can your business make?
Financial health
- Recent bank statements
- Company performance including recent and previous
- Assessment of your ability to repay the finance (including existing finance agreements being paid)
- Company forecasts based on successful asset finance.
Before applying for your asset finance make sure that you have addressed all of the above points either in detail or at least shown a clear consideration of them. Lenders, even asset finance ones, are far less likely to approve an application if they have to keep returning to ask further questions or clarify your suitability or creditworthiness because of omissions in your application.
This means that you should always disclose any information that can be found on your credit record, even negative ones. It is always best to offer more information than you think you need and elaborate on them. Always include the facts and make sure that any forecasts are realistic; show how beneficial the asset finance can be to your company.
