All businesses have assets which are required in the day to day working of the business. As the name suggests, they are an asset to the business. They can be in all shapes and sizes accoring to the type of work carried out.
Eg. Cranes, coaches, trucks and trailers, plant and machinery. The asset does not have to be brand new to be financed. A deposit is required with the balance payable over a certain number of years which depends on the asset.

The cost of the asset is spread out over a number of years within the expected lifespan of the asset which assists the finances of the business. There are different methods to finance the purchase, hire purchase and lease purchase, which are basically the same but with different payment profiles,finance lease and option lease, where the client does not take titile to the asset after the agreement.

In hire purchase and lease purchase the funder uses the asset as security and after full repayment, transfers ownership to the client.
With finance lease the client can continue to pay an annual secondary rental for the asset after the primary term and upon sale of the asset to a third party, will receive 85% to 95% of the sale proceeds with the remainder being paid to the funder.
At the end of an option lease, the goods are returned, there is no secondary period available.

The decision of which acquisiton method to be used is often down to taxation and the type of asset being purchased.

“Sweat the assets” keep them working to produce income and profit.