finance options - asset finance
Asset finance for your business
Whether your business needs to invest in new equipment or upgrade its vehicles, this guide will tell you everything you need to know about accessing the finance required to purchase new assets.
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What is asset finance?
Asset finance enables your business to purchase essential assets like equipment, vehicles, or machinery without a large impact on your cash flow. Instead of paying a large sum upfront, you can spread the cost over time with manageable monthly repayments. This type of funding is secured against the asset itself, which reduces the lender's risk and often results in lower interest rates compared to other business loans.
It's an ideal solution for businesses that are willing to grow, but lack the upfront capital to invest in new equipment. By financing assets this way, you can continue to expand your operations without straining your working capital.
Asset finance calculator
Use our asset calculator to see what your monthly repayments are likely to look like, as well as the total cost of the loan including interest.
Funding to buy or refinance an asset e.g. vehicle, machine or equipment. Usually a deposit is required.
How long do you want to pay back your loan for?
How much do you want to borrow?
£25,000
Interest rate
Typical business loans to cover costs range from 7% - 16% APR depending on the duration, amount and lender.
Loan amount
£ -
Total interest amount
£ -
11% APR over a 3 years.
Total repayment amount
£ -
Total monthly repayment
£ - / month
Not sure what your business can afford?
Sign up to check your affordabilityWhat is an asset?
An asset can be anything from a vehicle to office equipment. For a business, it's a resource, or a property, owned by the business and that has monetary value. Assets will be reported on a company's balance sheet.
What types of assets can I finance?
Objects like office equipment, which lose their value quickly, are known as soft assets. These are more challenging to fund because it can be difficult for the lender to recover losses if they depreciate.
Larger assets that hold their value like vehicles, machinery or equipment are known as hard assets. These will be easier to finance as there is less risk associated. Below are examples of hard assets you could finance:
Why use asset finance?
Faster access to essential assets
Businesses might need quick access to asset finance to get important equipment or technology right away, avoiding delays in their operations. If they wait for more revenue, they could miss out on opportunities or face higher costs. Fast access to funds helps them stay efficient and competitive.
Better cash flow management
Asset finance will allow your company to acquire essential equipment, vehicles, or technology without the need for a significant upfront payment. By spreading the cost over time through regular instalments, you can better preserve your cash flow for other critical areas of the business.
Reduced tax
You can offset your monthly repayments to reduce your tax liability. The cost of renting or leasing an asset is deductible as a business expense. This means that you can offset your monthly repayments to reduce your tax liability.
What are the types of asset finance available?
You can finance an asset in different ways. Which is right for your business will depend on a few factors. Consider whether you want to be responsible for the maintenance of the asset and whether you would like to own it at the end of the agreement. Here’s a summary of the different types:
Finance lease
A finance lease, also known as vehicle leasing, is a way for a business to use an asset, without having to use their cash to buy it outright*. The business essentially rents the asset from the lender and at the end of the asset finance agreement they have the option to either:
*Important to note: the business will be responsible for the maintenance, upkeep and insurance costs of the vehicle.
Hire purchase
Hire purchase is a type of asset finance that allows a business to pay for a new asset in instalments. Effectively, the lender owns the asset, until the business finishes the payment on the agreed terms. Once the last instalment has been paid, the business will own the asset outright.* During the terms of the hire purchase agreement, the business cannot sell the asset as it will still technically be under the ownership of the lender.
*Remember that any upkeep of the asset will be the responsibility of the business, not the lender. A Purchase Option Fee can be required to transfer the ownership of the asset, however this is generally a very small amount (in some cases as little as £1).
Operating lease
An operating lease is very similar to finance leasing. The business rents the asset from the lender and does not own it. The difference between the two, is that with operation leasing, the business only rents it for part of the asset's life. This can be a cheaper option as the rental cost is based only on a percentage of the asset's original value.
Refinancing
Refinancing is a way for a business to release cash from any assets already on the balance sheet. It can apply to assets the business owns outright, or already under a finance agreement. It is a useful option if a business is looking for a cash injection, or wanting to fund another piece of equipment.
Contract hire
Contract hire is most commonly used for accessing new vehicles for your business. Payments are calculated based on the purchase value and estimated residual value of the vehicle at the end of the agreement. It's usually sold once the contract expires which helps to drive down the monthly repayments for the duration.
What are the advantages and disadvantages of asset finance?
Advantages
Disadvantages
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Who is asset finance for?
Asset finance is ideal for businesses that need to acquire essential equipment, vehicles, or machinery but prefer not to tie up large amounts of cash upfront. It’s particularly beneficial for companies that are growing, expanding, or facing cash flow constraints. Whether you're a startup needing new equipment, an established business looking to upgrade machinery, or a company wanting to expand your fleet, asset finance provides a flexible and cost-effective way to obtain the assets you need.
Online lenders vs bank loan for asset financing
Online lenders offer several advantages over traditional bank loans when it comes to financing company assets. One of the key benefits is speed as online lenders can typically provide quicker approval due to their more streamline online applications. This faster access to finance can be crucial in maintaining or boosting cash flow, as businesses can quickly capitalise on growth opportunities or replace essential equipment without delay.
Online lenders also often have more flexible terms and less stringent requirements compared to banks, making it easier for businesses, especially small to medium-sized enterprises, to qualify for funding.
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