This type of funding is helping a growing number of franchisees to flourish, Rob Orme QFP, Franchise Relationship Manager at Franchise Finance, says
At Franchise Finance, we have seen first-hand how asset finance facilities are assisting more and more franchisees to flourish.
Making use of this type of facility could prove the difference between setting up a successful franchise business or being unable to reach the minimum investment required to set up at all.
Asset finance isn’t a ‘new’ product. However, some prospective franchisees are unsure of what it actually is and what it could do for their business.
Let’s use an example. Would you pay an employee’s salary for the next three, four or five years in advance? I highly doubt it! So why pay for equipment, machinery or vehicles in this way? You can spread the cost of assets over a period of years and reap the rewards.
Now to explore some of the biggest benefits:
- Leaves cash free to grow the business. If you decide against asset finance, the chances are you will be paying cash for your asset or assets upfront. Depending on the asset or assets, this could amount to hundreds of thousands of pounds upwards. Instead, why not use this cash elsewhere and fund the equipment, machinery or vehicles monthly over, say, five years?
- Leave credit capacity at the bank. Building on the previous scenario, perhaps you don’t have the hundreds of thousands of pounds in the bank to pay for the desired assets, so you want to borrow to finance the upfront cost. If you borrow at this point, you risk restricting your options with the bank in the future when seeking to raise finance, be it to fund growth or to see you through a rough patch.
- Cash flow predictability. The payment for your assets can be structured in such a way that you are provided with cash flow predictability. You will know, in advance, how much will be taken from your chosen account and when for the agreed period of time.
- Pay while generating revenue. Your business will benefit from the accrued income generated by the assets whilst paying the agreed rentals. Why wouldn’t you explore the possibilities of asset finance when investing in your business? Asset finance can be utilised to pay for equipment, vehicles, machinery, shop fit-out and so much more.
Find out more about the options available to you by talking to one of our asset finance experts today.