Business owners, do you know the difference between green asset finance and green asset finance when investing in your business? The first type of finance helps you to fund ‘green’ assets such as renewable energy equipment, from solar panels to heat pumps and wind turbines. Whereas the second type of asset finance – in particular lease finance – can help your business to use equipment more sustainably in a circular economy.
One thing is for sure: As businesses are getting ready to grow in a post-pandemic world they will need additional and up-to-date equipment: from new machinery and delivery vans to telecoms and security systems.
On the surface, investing in business assets may sound like buying things that will eventually turn into waste. However, instead of ‘buy-use-discard’ a circular economy focuses on repair, reuse, recycle. When investing in business assets leasing finance can help maximise the use of an asset over its entire life cycle. Rather than buying new things you need to run your business you buy a service by paying a leasing fee to access equipment and maintenance services. This means you can hand back the asset as and when you no longer use it for it to be repaired and leased to the next customer. To sum it up, how can your in-house finance team support your business’ sustainability goals?
- Consider leasing assets instead of purchasing them,
- Depending on the useful economic life of the asset within your business, consider a finance lease or an operating lease agreement,
- Go with an experienced lender who is able to accurately project residual values of your specific type of asset,
- Go with a lender committed to keeping leasing assets in re-use for as long as possible,
- At the end of term, hand asset back or start a new leasing term with the same (used) or a new asset;
While many UK lease finance lenders continue to adapt to fully support a circular economy we can help put you in touch with those asset finance companies best positioned to help support your sustainability agenda.