Asset financing in Kenya allows you to expand and modernise your business by acquiring assets for immediate use, without committing valuable capital or savings right away.
What is asset finance loan?
Asset financing in Kenya refers to the use of a company’s balance sheet assets, including short-term investments, inventory and accounts receivable, to borrow money or get a loan.
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The company borrowing the funds must provide the lender with a security interest in the assets.
How does asset financing work?
This kind of financing differs considerably from traditional funding, as the borrowing company offers some of its assets to get a cash loan quickly.
A traditional financing arrangement, such as a project-based loan would involve a lengthy process including business planning, projections and so on.
Asset financing in Kenya is most often used when a borrower needs a short-term cash loan or working capital.
In most cases, the borrowing company using asset financing pledges its accounts receivable; however, the use of inventory assets in the borrowing process is not uncommon.
Asset financing companies in Kenya
An asset finance company is an institution which engages itself in the principal business of financing physical assets that correspond to productive/economic activity such as machinery, automobile, tractors, material handling equipment, power generators, etc.
This is a list of some banks that you can access asset financing in Kenya.
- NIC Bank
- Co-operative Bank
- I&M Bank
- HF Group
- Equity Bank
- Barclays Bank
- Stanbic Bank
- Family Bank
- CBA Bank
Some Saccos in Kenya also provide this kind of financing, here is a detailed list of a few of them:
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- Mhasibu Sacco
- Jamii Sacco
- Finlemm Sacco
- Wananchi Sacco Society Ltd
- 2NK Sacco Society Ltd
- Nyati Sacco Society Ltd
- AMREF Sacco
- Mwalimu Sacco
- Hazina Sacco
Differences between asset-based lending & traditional lending
Asset-based financing is a much more flexible approach if you are sorting for a financing option to grow your business.
As opposed to traditional methods of financing where the borrowing company’s operations are evaluated, and its future cash flow is projected, asset-based loans are based on the collateral put up for the loan.
While asset-based lenders also lend against other types of assets, including inventory, capital equipment, and real estate, receivables are frequently the most significant proportion of collateral for these loans, mainly because of their greater liquidity.
Benefits of asset finance loans to the borrower
Borrowers benefit from asset financing in Kenya in a variety of ways.
ABL provides immediate and on-going cash flow liquidity for a company’s working capital, including the purchase of materials and supplies, the ability to meet seasonal requirements, to meet payroll and other operating expenses and to keep their accounts
- Asset financing allows a company to get a loan by pledging balance sheet assets.
- Asset financing is usually used to cover a short-term need for working capital.
- Some companies prefer to use asset financing in place of traditional financing as the financing is based on the assets themselves rather than the bank’s perception of the company’s creditworthiness and future business prospects.