Asset Finance
Spread the cost of business assets such as vehicles, equipment and machinery
Loan Amount
£25k-£5m
Loan Term
3-8 years
Time to Funds
As Little as 7 days
Interest Rate
From 4%
Asset finance to help you grow your business
Asset finance provides a means for a business to buy the assets it needs to function and grow, without having to pay cash up front. It’s a great way to get hold of the equipment you need to grow.
What is asset finance?
Whatever your business sector, there will be certain pieces of machinery, plant or technology that are essential to the organisation. If you’re an online tech business this might encompass IT equipment and office essentials. For dentists this could include dental chairs, scanners and specialist dental equipment. If you’re a manufacturer you might need equipment such as laser cutters, vehicles or tools. And if you’re in haulage you’ll need lorries and trucks. And for some business owners financing your next classic car to drive between meetings is high on the agenda!
Whatever the asset they you are funding, asset finance provides you with a means to buy the assets you need without impacting heavily on your cashflow.
How does asset finance work?
Asset finance can work in a few different ways, depending on the specific product. Hire purchase works by allowing you to spread the cost of buying an asset over a set amount of time – normally 3-8 years. Once you’ve paid the lender in full, the asset becomes your property.
Recently completed asset finance deals
- 50,000
- Dentist chair
- 2.68% fixed
- 60 month term
- 60,000
- DAF truck
- 1.88% fixed
- 36 month term
- £45,000
- Crane
- 2.5% fixed
- 36 month term
Hire purchase
The concept of hire purchase is familiar to most of us. It involves paying for an asset over time, in predetermined instalments. Interest rates are agreed in advance, and the buyer has the advantage of knowing exactly how much will be paid and when. Under a hire purchase agreement, the asset appears on the company balance sheet and is owned by the business. Of course, this also means the business bears associated costs such as depreciation, repairs and maintenance.
Leasing
Businesses are familiar with the concept of leasing cars and vans through vehicle leasing agents. However, the concept can be applied to any assets through a finance provider. The finance company buys the asset outright and leases it to the customer at a set monthly rate. Some lease deals include service and maintenance, meaning there are no unexpected extra costs. Leasing can be an elegant solution for businesses that want to retain a degree of flexibility. For example, a growing business that leases a small van can “trade up” to a larger one at the end of the lease period to support expansion.
Finance leasing
A third option falls somewhere between hire purchase and conventional leasing. Here, the lease agreement is more long-term than the usual three or five year lease deals that you might expect. The lease is over all, or most of, the asset’s useful life, and over this time, the company will pay the full value of the asset. However, as it remains the property of the finance company, it does not appear on the balance sheet. This brings potential tax benefits, so the option of finance leasing is one that businesses should definitely discuss with their accountants or tax advisors.
Refinancing assets
The above types of asset finance are all ways of raising money in order to procure essential business assets. There is, however, another form of asset finance that can be used to release capital that is tied up in assets that it already owns. This is known as asset refinancing. Conceptually, this is not dissimilar to a secured loan in that the finance company will provide cash as a function of the asset’s agreed value. In the event that the business is unable to make the agreed repayments, the lender has the right to claim the asset to recoup its losses.
Calculate how much you could borrow
Use our simple Business Loan Calculators to work out how much you may be able to borrow
Choosing the right type of asset finance
Asset finance encompasses a wider range of tools than most people realise. Choosing the right form of finance for your business depends on several factors, including how long you will need the asset, whether your needs are likely to change and the potential tax implications of owning or leasing the asset. Discuss all the options with both a professional finance provider and your own accountant to ensure you make the choice that will be right for you and your business.
Vendor finance
Vendor finance, also known as supplier finance, is a powerful tool that businesses can use to boost sales.
Imagine your customer is interested in purchasing your products or services, but they face cost or cash flow concerns. These concerns might otherwise hinder the sale. Vendor finance steps in. Working alongside a lender you offer financing options directly to your customer. Unlike traditional bank loans, vendor financing is tailored to your customer’s needs. It provides more flexible terms, making the purchase affordable and accessible.
Need advice on asset finance?
Talk to one of our Asset Finance Specialists. We’re on hand to take you through the options available.