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Benefits of asset finance for the Waste and Recycling industry

Andy Sagar, Managing Director of the Construction and Recycling division at Close Brothers Asset Finance details the benefits of asset finance for the Waste and Recycling industry.

In terms of the major challenges facing firms within the Waste and Recycling industry, the actual costs associated with recycling materials is one of the most prominent. SMEs have to consistently battle against costs which include everything from using a waste contractor to collect waste for recycling, to the costs associated with having appropriate space to process the collecting and sorting of waste for recycling. In some instances businesses employ recycling contractors for this purpose, therefore incurring further costs.

The issues of recycling costs combined with the rising price of capital equipment and the lack of available cash on offer to firms, means businesses in the industry face high overheads. With this in mind, it is vital that waste and recycling firms have the necessary access to appropriate finance suited to their needs in order for them to fulfil their expansion plans.

From experience, we’ve seen that small companies traditionally choose to speak to their bank for a loan or overdraft, but that is not the only, or necessarily the best option, for every business.

Asset finance lending volumes are constantly rising and as a sustainable funding method that allows a business to purchase plant and recycling equipment and machinery with a low capital outlay, it offers a range of benefits including tax breaks and flexible repayment schedules. It has evolved over the years and is now an increasingly popular source of valuable funding for businesses.

Where we have seen the greatest increase in demand for asset finance funding solutions is within niche sectors, such as Waste and Recycling. One of the main reasons behind this is down to the majority of well-established asset finance companies, such as our team at Close Brothers Asset Finance, having a strong understanding of the business needs within these industries. Our team is also very experienced and they have, more often than not, developed their careers within the sector they are now providing finance solutions to.

The importance of having this deep-rooted understanding of such niche sectors is paramount in offering a bespoke and sustainable funding option that enables businesses to purchase or refinance vital capital equipment in the Waste and Recycling industry.

Moreover, asset finance funding options provide businesses with several tax benefits through capital allowance on corporation tax bills. These allowances are available on a variety of items and equipment, including plant and machinery, meaning that businesses taking out certain asset finance products on these items can offset some of the payments made.

If you haven’t considered Asset Finance before, here are some further reasons why you should:

  • Flexible – the loan is generally secured against the asset you are purchasing so there is a good deal of flexibility in terms of the asset you acquire, helping to free up your working capital.
  • Gives you options – people using asset finance don’t put all their eggs in one basket because finance from a third party does not impact on existing bank borrowing facilities.
  • Predictable and stable – overdrafts are under constant review by your bank so if you have a downturn in business or a temporary issue with cash flow the facility can be reduced or withdrawn at the point when you need them the most. Asset Finance avoids this problem by agreeing monthly repayment profiles at the outset, giving you certainty around your financial commitments.
  • Refinancing - an excellent means of raising funds against unencumbered company assets and can be a very effective way of releasing capital for a business. When banks are becoming increasingly reluctant to provide overdrafts and the alternatives such as invoice financing may not be suitable to every business, refinancing is a great way of releasing funds.

Volumes of loans acquired through asset finance are constantly rising and as a sustainable funding method that allows a business to purchase equipment and machinery with a low capital outlay, it offers a range of benefits including tax breaks and flexible repayment schedules.