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.
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.
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. Just let us know how much you'd like to borrow, how long you'd like the repayments to be over, and your preferred interest rate. If something seems like a good match, you can get started with your application right away!
What do you need the funding for?
Funding to buy or refinance an asset e.g. vehicle, machine or equipment. Usually a deposit is required also.
For how long do you want to pay back your loan?
Interest rate
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£ -Total interest amount
£ - 9% APR over a 3 yearsTotal repayable
£ -Total monthly repayment
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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.
Capitalise can help you find a lender to finance most types of assets.
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:
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:
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 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.
*It's important to 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).
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 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 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.
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.
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.
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.
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 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.
It is possible to join a new lease agreement with your existing lease and determine a new fixed end period. Otherwise your existing lease can be partly settled, providing a flexible way of upgrading without rolling forward debt.
Capitalise is a UK based platform, our mission is to help businesses to take control of their financial health. We support business owners through our FCA regulated platform, an easy way for businesses to access over 100 lenders and compare their loan products. Our advanced platform makes intelligent matches and ranks lenders, based on their past successes, to help businesses select the best funding solution.
Capitalise also enables businesses to check their own Experian business credit score to better understand their financial health. Plus businesses can check the credit profiles of the companies they work with to reduce risk.
The cost of renting or leasing an asset is deductible as a business expense, so this can reduce your overall tax bill. If you expect to own the asset at the end of the lease or hire purchase period, this is considered a supply of goods for VAT purposes and you will have to pay VAT on the entire value at the start of the contract. If you will not become the owner of the asset at the end of the lease or hire purchase contract, this is a supply of services for VAT purposes, so VAT will be payable periodically.
You can claim capital allowances for assets bought through hire purchase as well as assets supplied through long-term lease. You can't claim capital allowances with shorter leases (i.e., less than five years and sometimes less than seven), but the leasing company can, so you should benefit indirectly through lower rental charges. Also, because it's a trading expense, you can usually deduct the full rental costs from your taxable income.
