Whether you’re upgrading equipment, purchasing new vehicles, or investing in machinery to scale your operations, big purchases can put serious strain on a business’s cash flow. That’s where asset finance comes in.
This guide will walk you through what asset finance is, how it works, and whether it’s the right fit for your business – without the jargon.
What Is Asset Finance?
Asset finance is a type of business funding that helps you acquire equipment or vehicles without paying the full cost upfront. Instead, you spread the cost over time – usually in the form of monthly payments.
There are different types of asset finance depending on whether you want to own, lease, or use the asset temporarily.
Common Types of Asset Finance
- Hire Purchase (HP)
You make fixed monthly payments and own the asset outright at the end of the term (after paying a small final fee).- Great for long-term use
- Fixed rates make budgeting easier
- You’re responsible for maintenance
- Finance Lease
You lease the asset for an agreed period, but ownership remains with the lender.- Lower upfront costs
- Option to extend the lease
- You never own the asset
- Operating Lease
Similar to a finance lease but for shorter-term use – ideal for assets that depreciate quickly or aren’t needed long-term.- Off-balance-sheet finance (can improve financial ratios)
- Can be more expensive over time
- Asset Refinance
Unlock cash tied up in assets your business already owns. The lender uses the asset as security and provides a lump sum based on its value.- Improves cash flow without selling assets
- Can consolidate other debts
- Risk of losing the asset if repayments are missed
What Can Asset Finance Be Used For?
Asset finance is used across nearly every sector in the UK. Common examples include:
- Commercial vehicles – vans, trucks, plant machinery
- Tools and equipment – construction, joinery, plumbing
- Industrial machinery – manufacturing, packaging, fabrication
- Technology and office equipment – laptops, servers, point-of-sale systems
- Agricultural and specialist machinery
If your business relies on physical assets to operate, there’s a good chance asset finance can help.
Benefits of Asset Finance for SMEs
- Preserves cash flow – Avoids large upfront costs
- Predictable budgeting – Fixed monthly repayments
- Access to better equipment – Stay competitive without compromising quality
- Flexible terms – Options from 1 to 7 years
- Potential tax benefits – Interest and depreciation may be deductible (check with your accountant)
How Much Can I Borrow?
The amount you can access through asset finance depends on:
- The value and type of asset
- Your business’s credit profile
- Deposit amount (if any)
- Chosen finance structure (HP, lease, etc.)
In general, asset finance is available from £10,000 to over £1m, with terms typically ranging from 12 to 60 months.
Is Asset Finance Right for My Business?
Asset finance could be a good fit if:
- You need essential equipment or vehicles but want to spread the cost
- You’re growing and want to avoid depleting working capital
- You’re upgrading old machinery to improve efficiency or sustainability
- You have valuable assets and need to unlock funds tied up in them
It may not be ideal if the asset is low value, used infrequently, or expected to depreciate very quickly.
Things to Consider Before Applying
- Will the asset hold its value over time?
- What are the total costs including fees, interest, and VAT?
- Is there a buyout option or balloon payment at the end?
- Who handles maintenance or insurance?
- How quickly do you need the asset?
Always get a clear breakdown of terms before committing—and compare offers where possible.
Explore Asset Finance Options for Your Business
Asset finance can be a practical, scalable solution for growing businesses across the UK. Whether you’re replacing aging equipment or investing in your next stage of growth, it’s worth understanding the options available.
Learn more about how Funding Pool helps UK businesses access flexible asset finance
Explore Asset Finance Options →