On average, 23% of a broker's existing customer base is self-employed and already accessing commercial finance directly from a bank, making this a good starting point for commercial opportunities.
Asset finance is an excellent solution for your small business customers who want to acquire essential assets or equipment for their operations. It involves borrowing funds to purchase or lease assets such as machinery, vehicles, technology, or equipment, which are then used as collateral against the loan. The assets themselves serve as security, reducing the risk for lenders and enabling small business owners to obtain financing more easily.
Asset finance provides businesses with several benefits. It allows businesses to purchase the equipment they need to grow now rather than wait to build up the necessary capital to buy it outright. Purchasing the equipment sooner rather than later allows them to take advantage of time-sensitive opportunities. Using asset finance means the business doesn’t have to take a large chunk out of its working capital. Instead, they can spread the purchase cost over time, making managing their capital flow much easier.
Chattel Mortgage / Equipment Finance: Equipment finance is a type of asset finance used by businesses to acquire equipment necessary for their operations. It can involve various financing options, such as leases, loans, or rental agreements, tailored to meet the specific needs of the business.
Finance Lease: In a finance lease, the lender purchases the asset and leases it to the borrower for an agreed-upon period. The borrower pays regular lease payments and has the option to either return the asset at the end of the lease term or purchase it at a predetermined residual value.
Operating Lease: An operating lease is similar to a finance lease, but it typically covers a shorter period. The borrower enjoys the use of the asset for the lease term and returns it to the lender at the end of the term. This type of lease often includes maintenance and servicing as part of the agreement.
Commercial Hire Purchase: Commercial hire purchase is a type of asset finance specifically designed for businesses. It operates similarly to a hire purchase agreement, where the lender purchases the asset and allows the business to use it while making regular payments. Ownership is transferred to the business after the final payment.
Novated Lease: A novated lease is a three-way agreement between an employer, employee, and a finance company. The employee leases the asset, such as a car, and the employer agrees to make lease payments on behalf of the employee from their pre-tax salary.
Consumer Asset Finance: A consumer contract covered by NCCP. It is used to help individuals fund personal assets, such as a car, boat or jet ski.
Please note AFG does not provide tax, legal or accounting advice. Any information contained in this document is of a general nature only and does not take into account the objectives, financial situation or need of any particular person and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Therefore, before making any decision, you should consider the information with regard to those matters and consult your own tax, legal and accounting advisors before engaging in or considering the appropriateness of any transaction.