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  • Views from the flipside

    Selecting the Right Asset Finance for your business

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Views from the flipside

asset-finance-460.jpgAsset financing of equipment is ever increasing and in demand.  Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said, “The asset finance market reported its thirty-first consecutive month of new business growth in April." So far in 2016 the percentage of UK investment in machinery, equipment and purchased software funded by asset finance increased to 31.8% in the twelve months to March 2016.

Typically business critical assets are rapidly depreciating; therefore many businesses will seek to spread the cost of acquisition over the expected life of the asset via leasing. 

Preserving capital for operational costs, purchasing stock, identifying new products and business opportunities that may arise are key drivers of growth in the sector and make the benefits of asset finance clear.

Asset finance (also known as equipment finance) will assist you in obtaining a wide range of equipment requirements and helps you to spread the cost of investment. Wholly or largely secured on the assets being financed, the need for large deposits is reduced, giving you the flexibility to replace or upgrade equipment at any time.

Frequently asked questions

Making the right decision on which finance product you choose to use for asset purchase is incredibly important. We always recommend that businesses seek to discuss their expenditure plans with an accountant or other relevant adviser. We have produced a simple guide providing some clarity around each product’s salient features:

Question Finance Lease Hire Purchase Commercial Loan
Will I be able to own the asset? Potentially Yes Yes
Are rentals tax deductible? Interest Only Interest Only Interest Only
Can I claim Capital or Annual Investments Allowance? No Yes Yes
Does this route preserve capital? Yes Yes Yes
Can I have a fixed term agreement? Yes Yes Yes
Can the term be extended? No No No
Will the agreement be made on
demand by LDF?
Potentially Potentially Potentially
Do I need to pay the VAT Upfront? No Yes N/A
Is the asset off balance sheet? No No No
Can VAT on payments be reclaimed? Yes No N/A
Do I have to insure the assets under the agreement? Yes Yes No
Can VAT on the cost of the asset be reclaimed? No Yes Yes
Will I need to pay a facility
or arrangement fee?
Yes Yes Yes

Remember:

  • Where VAT is classified as reclaimable assumes your business is VAT registered
  • The tax and VAT treatment may differ dependent upon the asset finance products
  • Facilities can be made on demand in accordance with the terms and conditions of the agreement
  • Please seek specialist advice on VAT and tax relating to your business
  • Please note that security may be required and product fees may apply

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By Ian Cushion
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Why choose LDF?

  • No red tape, so you can receive funds in as little as 24 hours
  • We accept 4 out of every 5 applications
  • Apply quickly and easily with E-sign loan documents
  • You’ll always speak to the same person
  • Free up cash flow for other areas of your business
  • Tailored finance agreements to suit your specific needs
Find out more

Views from the flipside

What our customers say

We could not have been happier. Banks as usual were a nightmare - they took over six weeks to eventually refuse for vague reasons unexplained. LDF were professional, helpful, friendly, and best of all, fast.

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