Asset Finance
Finance for business equipment, vehicles, plant and machinery without tying up working capital. Hire purchase, finance lease, operating lease and sale and leaseback. The asset itself is the security: no property required and adverse credit has minimal impact.
Free Consultation
Get a quick quote
Step 1 of 3: Security
No upfront fees · Business enquiries only · Min. £25,000
What is Asset Finance?
Asset finance is a suite of products that enable businesses to acquire or release capital from physical assets including equipment, vehicles, plant, machinery, technology and specialist business assets. Rather than purchasing assets outright and depleting working capital, a business finances the asset over its useful working life, paying from the revenue the asset generates. The lender holds a security interest over the asset itself, which means property is not required as collateral and the borrower's credit history has less impact on approval than in unsecured lending. There are four main structures: hire purchase, finance lease, operating lease, and sale and leaseback.
- Hire purchase: use the asset immediately; own it outright at the end of the agreement
- Finance lease: use the asset for its full useful life; lender retains ownership throughout
- Operating lease: use the asset for a fixed period; return or upgrade at the end
- Sale and leaseback: sell an asset you already own and lease it back immediately
- Security is the asset itself: no property charge required
- Available for new and used assets
- Adverse credit directors considered alongside asset quality
- Spreads the cost over the productive life of the asset
How Does Asset Finance Work?
Identify the asset and structure
Determine the asset to be financed, its purchase price (for new acquisitions) or estimated current value (for sale and leaseback), and the preferred structure. Hire purchase is most common for assets the business intends to own long-term. Finance lease suits assets where ownership transfer is not required. Operating lease suits rapidly depreciating technology or vehicles where flexibility matters.
Lender assesses the asset
The primary assessment is of the asset: its type, age, condition, value and resale liquidity. A specialist vehicle, aircraft or piece of manufacturing equipment will be valued differently from generic office equipment. The lender needs confidence it can recover its position through asset sale if required.
Business credit and trading review
Most asset finance lenders conduct a credit search and review recent accounts or bank statements. However, because the lender holds security over the asset, the credit threshold is lower than for unsecured lending. Adverse credit directors are considered, particularly for assets with strong resale markets.
Agreement and delivery
Once approved, the asset finance agreement is signed. For new asset purchases, the lender pays the supplier directly and the business takes delivery. For sale and leaseback, the lender purchases the asset from the business and the leaseback commences immediately. Monthly repayments begin from the delivery date.
How is Asset Finance Secured?
Asset finance is secured by a registered interest over the financed asset itself. In hire purchase, the lender owns the asset until the final payment is made. In finance and operating leases, the lender retains legal ownership throughout. In sale and leaseback, the lender purchases and holds title. Because the asset is the security, property collateral is not required. In the event of default, the lender repossesses the asset and sells it to recover the outstanding balance.
Exit Strategy
All lenders require a credible exit strategy before funds are released. Common exit routes include:
- Completion of all scheduled monthly payments (hire purchase: title transfers to business)
- Early settlement of the outstanding balance (subject to early settlement charges)
- Return of the asset at the end of a finance or operating lease term
- Upgrade to a new asset with a new agreement at the end of the lease term
- Sale of the business (the acquiring party assumes or settles the asset finance)
Is Asset Finance a Good Idea?
Advantages
- Preserves working capital for revenue-generating activity
- No property security required
- Adverse credit directors accepted where the asset quality is strong
- Repayments are predictable and aligned to the productive life of the asset
- Sale and leaseback releases capital from assets already owned
- Potential tax efficiency: lease payments may be fully deductible as a business expense
- Hire purchase gives full ownership on final payment
- Operating leases avoid the risk of asset obsolescence
Considerations
- Total cost over the agreement term is higher than an outright purchase
- Early termination typically incurs settlement penalties
- Finance and operating leases do not result in ownership of the asset
- Balloon payments at the end of some agreements require planning
- Assets used as security cannot be sold or significantly modified without lender consent
How to Secure Asset Finance
Identify the asset and obtain a quote
For a new asset, obtain a supplier quote or proforma invoice. For sale and leaseback, obtain a current valuation or recent comparable market data. The more specific and verified the asset details, the faster the lender can assess.
Choose the most appropriate structure
Consider whether ownership is important (hire purchase) or whether flexibility and lower monthly payments matter more (operating lease). Sale and leaseback is most relevant where capital release from an existing asset is the priority. We can advise on the most tax-efficient and cost-effective structure for your situation.
Submit enquiry
Provide the asset details, purchase price or estimated value, preferred structure, and a brief overview of the business. We identify specialist asset finance lenders and return indicative terms typically within 24 hours.
How Much Can I Borrow?
Asset finance amounts are determined by the asset value and type rather than a fixed lending ceiling.
- Typically up to 90 to 100% of the asset value for new assets
- Up to 70 to 80% of current market value for used assets
- Sale and leaseback: up to 70 to 80% of independently appraised value
- Minimum facility: typically £5,000
- No upper limit on high-value assets (aviation, marine, large plant)
- Term: 12 to 60 months for most assets; up to 10 years for aviation and large capital equipment
What Are the Costs?
How Quickly Can I Get a Loan?
Standard asset finance for vehicles, plant and general equipment is typically approved within 24 to 48 hours and funded within three to five working days. Larger or more complex assets (aviation, marine, specialist manufacturing equipment) require independent valuations and may take one to three weeks.
Eligibility Criteria & How to Apply
- UK limited company, LLP, partnership or sole trader
- Asset must be for business use (not personal or consumer use)
- Asset must be identifiable, valued and insurable
- Minimum six months trading history for most lenders (some accept start-ups for strong assets)
- Director adverse credit considered: assessed on asset quality rather than credit score alone
- Hire purchase and finance lease: director personal guarantee typically required
- Operating lease: personal guarantee requirements vary by lender and asset value
- Assets must be maintained and insured throughout the agreement term
9 Example Uses of Asset Finance
Commercial vehicle fleet
A logistics business expands its fleet from 8 to 14 vehicles. Rather than spending £420,000 in working capital, hire purchase agreements spread the cost over 48 months, financed from the additional delivery revenue the vehicles generate.
Manufacturing equipment
A precision engineering company wins a major contract requiring a new CNC machine costing £280,000. A finance lease funds the machine with monthly payments aligned to the contract revenue, preserving cash for materials and staffing.
Sale and leaseback of owned plant
A construction company owns £500,000 of plant and machinery outright. A sale and leaseback releases £380,000 of capital (75% of appraised value) for a new project deposit, with the plant leased back on a 36-month operating lease.
Technology refresh
A professional services firm replaces its IT infrastructure every three years to stay competitive. An operating lease covers servers, workstations and software, with a simple upgrade at end of term rather than a capital disposal headache.
Restaurant fit-out equipment
A restaurant operator needs £95,000 of commercial kitchen equipment. A finance lease funds the equipment over 36 months, structured so monthly payments represent a fraction of the additional covers the kitchen capacity enables.
Adverse credit director with business asset
A director with two historic CCJs needs a specialist forklift for a new warehousing contract. Standard lenders decline due to credit history. An asset finance lender focuses on the resale value of the forklift and the strength of the contract and approves within 48 hours.
Agricultural machinery
A farming business needs a new combine harvester costing £350,000. Seasonal income means monthly repayments must be structured to align with harvest receipts. A specialist agricultural hire purchase agreement structures payments accordingly.
Medical and dental equipment
A dental practice installs a new digital imaging system at £85,000. A finance lease spreads the cost over five years, with payments funded from the additional patient throughput the new equipment enables.
Aviation asset finance
A charter operator acquires a light aircraft valued at £1.2m. A specialist aviation mortgage is arranged with a 70% LTV against the appraised value, with the aircraft registered under the Cape Town Convention for lender security.
Ready to proceed?
No obligation. No upfront fees. Speak directly with a specialist.
Get a Asset Finance