Asset financing information

The business collaboration between Freco Equipment Supplies Limited and Bank of Africa Tanzania Limited was purposely designed as a supply chain solution for asset financing to help local contractors and other private companies to meet their financial and equipment needs.
This facility is available to private companies and active (CRB) registered contractors’ companies those who have projects from TANROADS, TARURA, MINING PROJECT, GOVERNMENT INSTUTIONS and NON-GOVERNMENT INSTUTIONS

Asset finance is a type of lending that enables you to access business assets such as equipment, machinery and trucks without having to buy them upfront. It can also allow you to release cash from the value in assets you already own or use your existing assets as security against a business loan from an asset finance lender.

Business asset finance is typically attractive to businesses who want to put their growth plans into action but don’t necessarily have the ready cash, or business owners who would rather spread large costs over a longer period.

Short-term asset finance also enables businesses to remain competitive by making it easier for them to access the latest technology. Asset finance is a broad category that relates to valuable items in your business.

Asset finance includes:

  • Equipment leasing
  • Hire purchase
  • Finance leases
  • Operating leases
  • Asset refinance

How asset finance works

Asset finance works in a few different ways, depending on which type of asset finance you opt for. Hire purchase works by enabling you to spread the cost of purchasing an asset over a set amount of time. Once you’ve paid the lender in full, the asset is yours to keep.

Equipment leasing, on the other hand, works by the lender buying the asset and you paying a monthly fee to rent it. At the end of the agreed term, you can extend the lease, pay the remaining balance to buy it, upgrade to a new model or return the asset back to the lender.

Asset refinance allows you to release cash into your business using your existing assets. You can also use it to consolidate debt or provide security when structuring a deal. Depending on your situation, lenders will typically lend up to 80% of your asset’s value.

You require the equipment quickly in order to meet this new demand, however it would cost thousands of pounds and your business can’t afford to pay outright.

After doing some research, you decide to opt for the hire purchase option. As the asset itself acts as the loan collateral, you don’t have to offer security which is another plus.

You agree with the lender that they will purchase the machinery and you will lease it from them over a 60-month period. A few days after finalising the loan, you receive the asset you need to increase your company’s production capacity

At the end of the contract, you purchase the equipment outright at a nominal price.

Who is asset finance for?

Asset finance is designed for local registered contractors companies,. It’s designed for those who wish to access an item that has high value to support their project business’ growth and spread the cost of the item over its usable life. Asset finance is available to eligible limited companies and partnerships, sole traders and public limited companies.

How long is asset finance for?

Asset finance is usually provided for anywhere between one to five years, longer in some instances (usually for very expensive assets). The asset finance company recoups the purchase cost of the asset over the agreed period, plus interest.

The length of time the finance is provided for also depends on how long the asset is going to be ‘usable’ for, as well as how quickly the lender wants the money back. As a business borrower, you’ll have to show that you can afford to make the agreed payments.

Asset finance to get new assets and used equipment

Paying cash up front for brand new equipment or machinery can be expensive, and could be a risky move that causes cash flow problems. And some companies simply don’t have the working capital for a big purchase — that’s where equipment finance comes in.

Open a business current account at BOA Bank and apply asset financing and working capital for your project

Simple documentations process required and quicker approvals.