Whether it is machinery for the workshop or equipment for the office, the cost of equipping a business can put an intolerable strain on cash flow.  However, there is a way of solving this problem and it does not involve an overdraft or having to take out a bank loan.  Instead the enterprise can secure those business essentials through leasing and asset finance.

With leasing and asset finance there will be costs and they will eventually be higher than if the equipment was purchased outright.  But the expenditure will be spread over a period of time and the business will be spared the strain of having to find the money up front.  What is more, because costs are spread, the business may well be able to afford much better equipment.

There are also other advantages for business people availing themselves of leasing and asset finance.  It offers less risk compared with a secured loan when homes can be lost if payments are not kept up.  Also, the interest rates for the monthly payments usually do not vary.  This will allow businesses to factor them into their budgets.  Unlike with an overdraft, where the bank can demand repayment at any given time, the deal will be allowed to run for the agreed period, provided the payments have continued to be paid.

There are some disadvantages with this form of finance.  The business may have to provide a deposit.  And capital allowances are unable to be claimed on leased assets for leasing periods of less than five years (seven in some instances).

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