As of 1st January 2019, the Annual Investment Allowance (AIA) has increased from £200,000 to £1 million, a very welcome New Year’s gift to UK businesses! Let’s explore what the AIA means and why you should act this year to take advantage of the opportunities it offers.

Asset finance is one area where banks still consider advancing finance to SMES. However, there are circumstances where a bank may still decline applications from profitable, established companies. For example, where the asset is outside of the mainstream asset class types or the industry is considered high risk.

Asset finance is fairly unique in business financial products because it uses the asset in question as security for the advance. This can often reduce the amount of checking that the lender needs to perform, making the process faster and easier than, alternatives such including applying for a traditional bank loan. In fact, the speed and ease with which asset finance can be made available is one of the factors that make it such a popular financing option with businesses.

Acquiring equipment can eat up significant amounts of capital, which may starve growth potential when you want to focus investment on other areas of your business. Likewise, capital can be locked up in existing assets and releasing it can deliver the required investment funds. Asset finance is a flexible mechanism that provides easy and fast funding for any business purpose, which can indirectly ease cash flow concerns.

Businesses seeking finance no longer need to depend on conventional bank loans. Nowadays, there are many options available in the alternative finance markets from specialist service providers. This means greater flexibility in choosing appropriate products, terms and repayment plans.

There are several factors to consider when acquiring an asset for your business. On the one hand, purchasing outright adds value to the balance sheet while leasing can often further ease cash flow pressure.

Commercial Property Finance Guide will tell you everything you need to know about commercial property loans and support.

Asset finance solutions are suitable for businesses who are seeking short to medium term finance. In essence, it involves using an asset as collateral for a business loan – whether to acquire an asset or to use the value of an already owned asset to increase liquidity. This is a significant difference from other secured loans which may require personal guarantees from the directors.

Asset finance is a finance solution with repayment terms typically ranging from 1 to 5 years, so why are we talking about ‘long term’ in the same breath? The answer is that such routinely obtained finance can have a huge long term impact on a company’s long term cash flow and growth strategy.

Asset finance is a funding tool that uses Hire Purchase or Leasing arrangements to enable a company to acquire assets including plant, equipment, vehicles and technology. It can reduce the need for large up-front investment by spreading repayments typically from 1 to 5 years or even longer by arrangement.