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Our Conversation with Barend Nienaber, Asset Finance Expert at Capital Connect
We recently caught up with Barend Nienaber, Capital Connects asset finance expert, to dive into how this type of funding can be a real advantage, particularly for small and medium-sized enterprises (SMEs).
So, what exactly is asset finance, and why is it so useful for SMEs?
“In simple terms, asset finance is when a business borrows money using its assets—such as vehicles, machinery, or equipment—as security,” Barend tells us. “It’s ideal for SMEs because instead of paying upfront and draining their cash reserves, they can spread the cost over time. This way, they can invest in the equipment they need without putting a strain on cash flow.”
Barend also points out how asset finance can help build a company’s credit score. “By keeping up with payments, businesses can create a positive payment history, which helps them secure future funding on better terms.”
What types of assets can businesses finance, and are there any that are often overlooked?
“The most common assets are vehicles, trucks, trailers, manufacturing equipment, IT systems, and office furniture,” Barend notes. “However, businesses often overlook intangible assets, such as intellectual property or software licences.”
When should a business opt for asset finance over a traditional loan?
According to Barend, the decision often depends on the business’s needs. “If a company needs specific equipment or assets, asset finance is usually a better choice,” he says. “It’s perfect when you want to avoid a large upfront cost and instead spread the payments over time.”
“This approach helps businesses maintain liquidity. They’re able to invest in the assets they need without the pressure of a significant financial outlay all at once,” Barend adds. “Traditional loans are generally better suited for things like covering operating costs or working capital requirements.”
He also mentions that, depending on the lender, specialist assets like solar panels or energy-efficient technology might qualify for financing too.
What do lenders look for when assessing an application for asset finance?
“Lenders focus on the value of the asset,” Barend explains. “They’ll apply a loan-to-value ratio (LVR) to decide how much they’re willing to lend based on the asset’s worth. The asset itself serves as collateral, which reduces their risk.”
He continues, “Lenders will also assess whether the business can afford to make the repayments, by looking at factors like cash flow, profitability, and existing debt.” The company’s financial health and credit history also come into play. “A strong track record makes it easier to secure better terms.”
The asset’s condition and its remaining useful life are also key factors. “Lenders need to know the asset will hold its value for the duration of the loan,” Barend adds.
Does asset finance work differently for newer businesses compared to established companies?
“Absolutely,” Barend says. “For newer businesses, asset finance can be a great way to get the equipment they need without having a lengthy credit history or making a large deposit upfront. However, because there’s more risk involved, lenders might require personal guarantees or a higher deposit.”
More established businesses, on the other hand, generally find the process smoother. “They’ve got more bargaining power and can often negotiate better terms, like lower interest rates,” Barend explains. “But even established companies with poor credit histories may face challenges similar to those of newer businesses.”
Asset finance offers businesses a flexible and strategic way to invest in essential equipment, and with experts like Barend Nienaber at Capital Connect, companies can make informed decisions on how best to finance their assets.
Why choose Capital Connect for asset finance?
Tailored Solutions: We customize our funding to meet the unique needs of your industry.
Diverse Financing Options: From trucks to specialist tools and IT equipment, we finance a wide range of assets.
Competitive Interest Rates: Enjoy transparent and fair rates, making it affordable to acquire essential assets for your business.
Barend Nienaber
