How to harness the power of working capital and asset finance for business growth

As dedicated and highly experienced commercial finance brokers, many business owners approach us for financial solutions to help them grow their business. Successfully harnessing the power to manage investment in assets and securing working capital to allow for expansion is quite often the answer!

What is Asset Finance?

Asset finance refers to a financial arrangement where a company or an individual obtains funding to acquire assets, such as equipment, vehicles, plant and machinery. Instead of purchasing the assets outright with their own capital, the borrower enters into a financing agreement with a lender, often a bank or a specialized asset finance company.

Asset finance is commonly used by businesses that require expensive assets, such as equipment, machinery, vehicles, or property to operate but may not have the necessary funds available to make an outright purchase. By using asset finance, these businesses can spread the cost of the asset over a specified period, typically through regular repayments.

Asset finance offers several benefits to businesses, including preserving working capital, managing cash flow, and providing flexibility in acquiring essential assets. It allows businesses to access necessary equipment or assets without a significant upfront investment, enabling them to grow and expand their operations.

What is Working Capital?

Working capital finance plays a vital role in enabling business owners to manage their day-to-day operations, navigate cash flow challenges, and pursue growth opportunities. By maintaining adequate working capital, businesses can ensure liquidity, stability, and flexibility while positioning themselves for sustained growth and success.

Who could benefit from a combination of working capital and asset finance?

Many small and medium-sized enterprise (SME) clients on a path of growth, such as those actively seeking new contracts or working on innovative product development, often require financial assistance to support their expansion efforts and could benefit from a combination of asset finance and working capital.

These financing needs are prevalent in various industries, including construction, manufacturing and processing, labour hire, hospitality, gyms, and solar panel installation.

What are some scenarios where asset finance and working capital can be combined?

“A business that wins a major new contract and needs to not only buy equipment, but also hire more staff and purchase stock to fulfil that contract. They could use a working capital loan for wages and stock, and take out asset finance for the new plant and equipment.

Their broker could encourage them to consider what unencumbered assets they already own, that can be utilised as collateral to raise equity. An SME client recently arranged through their broker to leverage a $200,000 bulldozer they already owned, to raise a $100,000 asset finance loan.”

If you’re a business owner who wants to acquire business equipment/assets or need help to navigate working capital or cash flow finance scenarios, contact us to discuss your needs today!

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