For new entrepreneurs, the term “business assets” gets thrown around quite a bit. Banks and private lenders alike will often ask for a list of assets when new business owners are applying for financing. Certain assets can be used as collateral. Some assets can be leveraged for lines of credit. Others are only relevant when claiming tax deductions. At CNH Finance, we have put together an easy to follow guide on the difference between fixed, soft, and intangible assets.

Fixed Business Assets

Fixed business assets can span the gamut of equipment, vehicles, real estate, inventory, receivables, and more. The defining feature of all fixed assets is that they are all owned by the business. For instance, businesses may purchase equipment and facilities. Products made by a business or those purchased for resale are considered fixed business assets. Receivables are also fixed assets because they account for revenue, which is owned by the business. Fixed assets are not borrowed or leased from other entities. Fixed assets can also be leveraged for revolving lines of credit. Asset based credit does not place any debt on the books, which means new business owners do not have to rely on bank loans for working capital.

Soft Business Assets

Soft business assets are items used by a business, but not purchased. Office space and facilities which are rented, for example, are soft assets. Equipment and vehicles which are leased are considered soft assets. The benefit of soft assets is that all payments made to lessors can be claimed as tax deductions. The IRS Tax Code, under Section 179, provides for deductions on leased items used for business up to a limit of $500,000. Entrepreneurs can recoup quite a bit each year if they carefully deduct soft assets and provide the supporting documentation.

Intangible Business Assets

Intangible business assets fall into a bit of a gray area, hence the term. Intangible assets include things such as copyrights, tangents, and intellectual property. With rare exception, the advantages of intangible assets often come with generating revenue through proprietary systems, services, and products. Quite often, intangible assets are established to carve out a stronger foothold in the marketplace and set businesses apart from other competitors in the same industry.

CNH Finance provides financing by tapping into the hidden value of fixed business assets. Our team will perform an in-depth analysis of your fixed assets to create a revolving line of credit. Contact our offices to learn more.