Asset financing is an act of borrowing money or obtaining a loan using a statement of cash flow sheet assets, such as relatively brief securities, stocks, and trade receivables. A security interest in the assets must be provided to the lender by the firm borrowing the cash.
This type of financing is the ideal answer for those who have huge goals but lack the financial means to realize them. The scheme is provided to entrepreneurs who have current business accounts with Mwananchi or other banks or credit firms.
Asset finance should be your best option if you wish to acquire assets like trucks, trams, vehicles, or other mobile assets. One is not restricted to these handful assets; you may also examine service providers for other commodities such as large industrial machines, motorbikes, and many forms of machinery.
How Does Asset Financing Work in Kenya?
Depending on the form of asset financing you choose, asset finance operates in a few different ways. Hire purchasing works by allowing you to stretch the cost of an asset over a certain period of time. The asset is yours to retain once you’ve paid the lender in full. In contrast, equipment leasing involves the creditor purchasing the item and you’re paying a monthly subscription to keep it.
You have the option to renew the lease, reimburse the sum to acquire it, update to a production concept, or relinquish the asset to the lender at the end of the agreed period. Asset refinancing allows you to inject funds into your company while keeping your current assets. Asset financing businesses in Kenya should be on your shortlist if you need working money quickly. They offer a dependable and speedy service. The best part is that you may use your accounts receivable or stock deposits.
It differs from the sole methods used by banks to fund property purchases by investors. The company pledges its assets in order to facilitate speedy funding. Loans for asset finance are processed quickly. When seeking comparable help from a traditional lender, the credit tends to take way more time and must go through multiple phases, including projection and business planning.
How Do I Get Asset Financing in Kenya?
In Kenya, asset-based loans are popular. They have several advantages for both small and large organizations. When compared to regular loan lenders, asset financing companies are more lenient. They enable investors to obtain funds rapidly without having to pay exorbitant fees.
Asset financing is often available for one to seven years, or indeed longer in rare cases (usually for very exquisite assets). Over the agreed-upon time, the asset finance firm restores the asset’s acquisition price, principal rates.
The amount of time the loan is extended is also determined according to how long the asset will be ‘used’ and how fast the creditor demands the money repaid. You must demonstrate that you can be required to pay the agreed-upon installments as a business borrower.
Mwananchi Credit in Kenya is an exceptional place to go if you need asset financing. They feature an asset financing calculator that will help you figure out how much you can borrow and how much they will charge. Apply now to get funding for your company’s long-term growth.
What is LPO Financing?
LPO Financing is equivalent to getting a line of credit to meet the demands of your customers. Due to a financial problem, you may not be able to complete a customer’s purchase order as a supplier. The Purchasing Order financing can provide you with funding to accomplish the work ahead of schedule. The money, on the other hand, is paid to your distributor’s account.
After that, the supplier delivers the items to your client, who pays the provider directly. After deducting their costs, the provider pays you the balance. A purchase order financing firm generates revenue by asking users a percentage of the amount they advance to your supplier, just like any other lender.
What Are the Four Types of Asset Financing?
1. Operating Lease
An operational lease is analogous to an equipment lease, although equipment leases are usually for a short period of time, whereas operating leases are usually for a longer period of time though not for the whole life of the asset. In a nutshell, operational leases are frequently a less expensive alternative because the asset is leased for a shorter period of time. Funds are displayed just for the period the asset is in use, not for the full value of the item. Operating leases are advantageous to organizations that require equipment for a short to medium period of time.
2. Equipment Lease
Because of the independence and versatility they provide, equipment leases are a common asset finance alternative. An equipment lease is a contract between a borrower and a creditor that allows the borrower to utilize the item for their business for a certain length of time. The business is responsible for making payments until the contract time expires. When the lease expires, the company has the option of returning the loaned equipment, extending the lease, upgrading to newer equipment, or purchasing the equipment altogether.
3. Hire Purchase
The creditor buys the asset on behalf of the investor in hire purchase. The borrower will make periodic payments to the lender in order to pay off the collateral. The asset is then possessed by the debtor until the debt is repaid. The borrower will be afforded the opportunity to acquire the asset at a minimal fee after the last payment is completed.
4. Finance Lease
The financial lease is distinguished by the fact that the borrower assumes strong shareholder liabilities for the term of the lease. Throughout the term of the lease, the borrower is responsible for the asset’s upkeep.
What are The Benefits of Asset Financing?
- Traditional bank loans are more difficult to get.
- Budgeting and cash flow management are simplified with fixed payments.
- The majority of contracts have set interest rates.
- Non-payment leads to the forfeiture of only your assets, nothing else.
Mwananchi Credit is a recognized Kenyan asset financier microfinance company. It provides services to aid Kenyans to keep their businesses thriving. The path to prosperity is lengthy and arduous, and it needs adequate finance flow. You can fund your next business and get it off the ground quickly with asset loans for automobiles or any asset.