Understanding Heavy Asset Financing: Busting Top 8 Myths And Their Realities!

Asset financing is truly a life-saver for businesses looking for financial assistance to run their operations smoothly. It allows them to upgrade their inventory, equipment, and vehicles, thus improving their overall standard. There are two types of asset financing – soft assets and heavy assets.

Soft assets include things like goodwill and reputation, while heavy assets include equipment, inventory, and vehicles. However, heavy asset financing is as in-demand as they’re overwhelming to deal with. 

For instance, most British entrepreneurs often come across unusual myths about construction machinery finance in the UK. Therefore, clearing those myths is crucial as they mislead and confuse the ideal candidates.

If you’re considering signing up for heavy asset finance, let us bust all the possible misconceptions you’re more likely to encounter.

Myth # 1- Heavy Assets Is Only For Larger Corporations

There’s no denying that companies with a higher credit score and a successful journey often choose heavy assets. Also, it’s due to the fact that they’ve high-tech requirements and purposes.

However, that’s not always the case, and minor and SMCs can also access heavy asset financing. It includes equipment, machinery and vehicles. Many lenders offer tailored solutions for businesses of various sizes.

Myth # 2- Heavy Asset Financing Is Only For New Assets

It’s a common misconception among business owners that asset financing can only be done with new assets, which can be pretty expensive. Yet, you must know that financing can be arranged for both new and second-hand assets.

Lenders take into account factors such as the condition, age, and residual value of the investment when structuring financing deals. It means that you can obtain financing for used assets, which can be a more cost-effective option.

Myth # 3- Heavy Asset Financing Is Only For Certain Industries

Heavy assets are not limited to industries like construction, transportation, and production. While these sectors may be more likely to use such assets, heavy assets can also be utilized in other areas such as manufacturing, agriculture, and energy suppliers.

Additionally, regardless of the business type, one may choose to invest in heavy assets such as vehicles, equipment, and inventory.

Myth # 4- Heavy Assets Always Require Hefty Down Payment

When dealing with heavy assets such as equipment, inventory, and vehicles, it’s easy to assume that a higher down payment will be required.

However, the actual requirements can vary greatly depending on the lender. While some may demand a significant upfront fee, others offer financing options with lower initial costs or even no down payment arrangements.

For this, you may research and compare various lenders to find the best choice for your specific needs and budget.

Myth # 5- Financing Rates Are Fixed And Non-Negotiable

Every business has its unique financial situation, which requires different financing rates. It is important to note that companies with a strong credit profile are often able to negotiate more favourable terms, such as lower interest rates and flexible repayment schedules.

Therefore, businesses must carefully assess their financial needs and capabilities and explore their financing options before making any decisions.

Myth # 6- Heavy Asset Requires Perfect Credit

Heavy asset finance indeed prefers businesses with higher credit scores. However, it is optional to have a high credit score, as financing options are available for businesses with varying credit profiles.

Although having a stronger credit score may result in better terms, lenders often offer solutions for companies with less-than-perfect credit.

Myth # 7- Leasing And Financing Are The Same

When it comes to leasing and financing, most business owners juggle to select when seeking horsebox funding solutions in the UK. While both concepts are interrelated, they work differently.

Financing involves ownership, while leasing allows the use of the asset without ownership. Both options have their benefits and considerations, so always do your due diligence before signing the contract.

Myth # 8- Heavy Asset Finance Is Complex And Lengthy

There’s no denying that heavy asset finance requires thoughtful research; there’s no such complexity involved. Nowadays, tech advancement and streamlined processes have made asset finance more efficient. At the same time, quick approvals and funding options are possible, especially with well-prepared applications.

Wrapping Up!

Now that we’ve cleared all the possible misconceptions regarding heavy asset finance, you’ll make a well-informed call. However, it’s crucial to carefully review the terms, understand the financial implications, and seek expert suggestions.