Asset finance helps the construction sector grow

Throughout the last 17 years working in the asset finance sector, the construction industry has been the most volatile, with the recession of 2008 firing shockwaves throughout all construction companies.

By Richard Fothergill, sales director, LUV Asset Finance

Over the last 2 years in particular, the construction sector has managed to get back “on it’s feet” and with Government incentives such as “Equity To Buy Schemes” being implemented to support both the residential house builders as well as the buyers.

Construction sites and equipment are a regular sight as we all go about our day to day business.

To ensure construction businesses of all sizes, attempt to keep one step ahead of both technology and competitors, asset finance is a welcome offering to allow businesses to continue to acquire new plant & machinery, whilst at the same time ensuring that working capital is retained in the business. Asset finance allows companies to budget for a fixed monthly cost that is not affected by either interest rates or market volatility.

Access to competitive rates and quick turnaround has never been so easy, resulting in asset finance becoming the preferred method of choice throughout the construction industry.

Not only does this type of funding enable companies to acquire large capital cost equipment such as; yellow plant, vehicles, screeners / crushers, excavators, cranes, bulldozers & dumpers but alleviates pressure on working capital, whilst at the same time companies can benefit from the Annual Investment Allowance, reduce their tax liability and claim the VAT element of the funding back from the VAT man.

From a funders perspective, assets funded in the construction sector are regarded as desirable assets to fund due to their strong 2nd hand residual values, offering excellent security against the exposure with the finance house. So much so, that small or even no deposits are required as part of the finance solution.

As well as seasonal or structured payments throughout the repayment profile being sanctioned to match the seasonality of the nature of the sector, over a maximum of a 7 year term.

As well as funding machines and equipment through a direct supply invoice chain, it is common practice for businesses in construction to raise capital against equipment that the business owns outright to release cash in to the business to fund the long term contracts they find themselves working on.

This method of refinancing is carried out through Sale & HP Back, with rates, terms and turnaround times being competitive and quick. Should you wish to learn more about asset finance and specific packages to suit you and your business, please feel free to contact the team at LUV Asset Finance who would be delighted to assist you.