Asset Finance for Plant and Machinery: All the Information You Need

Asset Finance for plant and machinery digger background

January 2021 is a difficult time for many industries, including the construction and manufacturing sectors. In the midst of Covid-19 lockdown number 3, engineering and construction can continue, however, uncertainty reigns supreme with circulating rumours over increasing lockdown measures, in addition to the ongoing financial and economic impacts of the past 12 months. Asset finance can be used by organisations to help in a variety of different ways; keep reading to learn everything you need to know about asset finance within the construction and engineering sectors.

Plant and Machinery Asset Finance Options

Asset finance covers several different financing options depending on the current requirements of your business. The primary ways of utilising plant and machinery asset finance are:

  1. Finance to purchase new plant or machinery 
  2. Refinancing already owned equipment to raise capital

Below we will look at each of these areas of asset finance individually to help you understand the differences and decide what is best for your business. Of course, for expert advice and further information you can always contact us at MC Commercial Finance.

Asset Finance to Purchase New Equipment

Investing in new equipment may seem daunting in such uncertain times; however, it may be a vital expense for ongoing improvements to the performance of your business. This is where asset finance for plant and machinery can help. 

Plant and machinery may be essential to the functioning of your business; but knowing how to finance such major purchases can be difficult, particularly for small and medium sized enterprises. Whether you are looking to purchase or lease equipment, asset finance can offer you the funding required to quickly get the machinery you need for your business. Whether as a long-term plan to keep your plant up to date, or due to urgent need such as the failure of existing machinery, asset finance is available to keep your business moving.

Essentially asset finance allows your business to have and to use, the plant and machinery it requires, without having to make a large upfront payment to purchase the equipment. Some of the benefits of choosing asset finance include:

  • Fast access to new plant
  • More flexible than traditional finance options
  • Fixed payment and terms for improved cash flow
  • Tax efficient way to finance investment in large machinery 

When choosing to purchase equipment for your construction or manufacturing company using asset finance there are many different options to consider such as:

  • Hire purchase agreements where you own the plant after all repayments are made
  • Fixed period machinery leasing options
  • Agreements that allow you to upgrade your plant after a fixed period of time

To discuss all the options that may be available to your organisation why not book a call with a dedicated finance broker, such as MC Commercial Finance, who can talk you through all the options and help you decide the best way forward for your business. 

Borrowing Against Existing Assets 

Another facet of asset finance allows you to borrow money against assets that are already owned by your business. In situations such as the current Coronavirus pandemic cash flow can become tight. In this case borrowing against plant and machinery that you have already paid for could be a solution to ease those cash flow concerns and allow you to pay creditors, wages and other essential payments. As with all finance we would recommend discussing your options with an experienced broker to ensure that you make the right decision for your business. 

When considering asset finance to borrow against existing plant or machinery there are both advantages and disadvantages:

Advantages:

  • More obtainable than a traditional bank loan
  • Fixed repayments for better budgeting
  • Most asset finance agreements have a fixed interest rate for stability

Disadvantages:

  • Risk of losing the plant/machinery if repayments are not made
  • Valuation of assets can be lower than market rates
  • Short term funding solution 

Asset Finance for Construction & Engineering

Considering finance options for construction and engineering companies can be a minefield, particularly during the current economic uncertainty that 2021 brings. MC Commercial Finance has many years of experience in helping businesses of all sizes to secure finance. Take a look at the full range of services that we offer, and do not hesitate to contact us whether to specifically discuss asset finance for plant or machinery or any other aspect of commercial finance for the manufacturing and construction sector.