Growing your business with Asset Finance
Wednesday, February 27, 2019/
Businesses are built on ideas. And in 2006, the four young men who started Executive Security Solutions (ESS) had a big idea.
At the time still in their late teens and early twenties, they’d noticed a gap in the market for a boutique security service – one that didn’t just offer the typical big, burly bouncers, but premium service and professionalism.
When they later saw an opportunity to expand their service to include a mobile patrol division, they needed to borrow additional funds for four Hyundai Tucson 4WDs – vehicles that would support their status as an executive service.
ESS chief financial officer Danny Harris says securing asset finance “helped us enter the market with a bang, and since then we’ve been able to grow the division efficiently and quickly and move to more fuel-efficient vehicles through further financing.”
But if you’ve never applied for asset financing before, the process can seem a little daunting.
The application process
Asset Finance is a flexible and convenient method of financing your income-generating assets for your business.
When reviewing applications, ANZ asset finance manager Kylie Swaine says generally assessors are looking at a number of different elements, including: .
- Customer background: This includes information such as what the business does, how long it has been in the industry, and the purpose of the asset being purchased.
- Business financials: Including the last two years profit and loss and balance sheet for the business.
- The directors’ tax returns for the last financial year
- Commitment schedule: A schedule outlining the business’s existing finance commitments.
- Details of what is being financed: The assessors will need to determine the value of the asset and security. For example, if the asset is a car or a truck, the assessors will need to know the year, make and model.
Strengthening your profile
An Asset Finance application is less likely to be approved for high-risk assets, if it’s a new venture, or if there is no capacity to service the loan – i.e. the business can’t afford to pay it back.
However, there are ways to strengthen your application or customer profile – for example, a new venture could present a signed contract from a client with an ongoing commitment to purchase goods or services, along with a cash-flow forecast and a business plan showing their projected income and expenses.
“If you’re purchasing an existing business, you should request vendors financials to see how the business is performing,” says Kylie. “Your personal financial position will also be taken into account”.
Now that he knows what to expect, Danny says subsequent Asset Finance applications for ESS have been quick and easy: “I’ll just call up and say: ‘This is what we need and why we need it’ and I’ll have all the required documents ready.
“We’ve been able to purchase cars, office equipment, IT and furniture to grow from a small business to a medium-to-large business in a matter of years, and there’s no stress and no issues.”