ABOUT ASSET FINANCE
WHAT IS ASSET FINANCE
This type of finance is used to describe ‘Leasing’ or ‘Hire Purchase (HP)’ solutions for businesses. There are various products available which allows businesses to purchase assets which might otherwise be out of reach due to cash flow or have the need or opportunity to grow but may not have the funds readily available.
The leasing or HP products usually involve paying a regular charge for an asset over an agreed period of time (term), which avoids the full cost of buying the asset outright.
The purchase of assets in this way can range from small i.e., office telephone equipment, coffee machines to large i.e., heavy goods vehicles, plant and machinery.
WHY ASSET FINANCE
PRESERVE YOUR
WORKING CAPITAL
Acquiring machinery or equipment outright drains the cash reserves that keep your business moving. Asset finance lets you spread the cost over fixed, predictable payments — so capital stays where it belongs.
FINANCE PRODUCTS
FIVE WAYS WE CAN HELP
HP
HIRE PURCHASE
Fund the asset with fixed payments over an agreed term, then purchase ownership outright at the end. Ideal for businesses that want eventual ownership.
HOW IT WORKS
The HP provider retains ownership throughout the term and leases the asset to your business for an agreed regular fixed payment. This product is very flexible, with the ability to choose your deposit contribution.
BEST SUITED FOR
MANUFACTURING
TRANSPORT & LOGISTICS
CONSTRUCTION
AGRICULTURE
CAPITAL LEASE
FINANCE LEASE
Lease an asset over an agreed term while spreading the cost into fixed payments. Lease payments may usually be treated as a business expense, and VAT-registered businesses may be able to reclaim VAT in line with HMRC rules.
HOW IT WORKS
Does not provide the opportunity to own the asset outright. The business leases it until the lender recovers the purchase value. From an accounting perspective, lease payments can be offset against profits and VAT can be reclaimed.
BEST SUITED FOR
PROFESSIONAL SERVICES
TECHNOLOGY
HEALTHCARE
RETAIL
FLEXIBLE USE
EQUIPMENT LEASING
The lender purchases and maintains the asset. At term end: extend, upgrade, buy, or return. Maintenance stays with the provider, not your business.
HOW IT WORKS
Similar to Finance Leasing — the lender purchases and leases the asset at a fixed fee over an agreed term. At completion you can extend, upgrade, purchase at an agreed cost, or return it. Servicing and maintenance are the lender’s responsibility.
BEST SUITED FOR
HOSPITALITY
MEDIA & PRODUCTION
FITNESS & LEISURE
ENGINEERING
SPECIALIST USE
OPERATING LEASE
Best for specialist machinery where you need the asset for less than its full working lifetime. No purchase obligation — simply use and return.
HOW IT WORKS
Used for specialist machinery or equipment where the business has no interest in buying the asset and does not expect to use it for its full expected lifetime. Pure usage with no ownership exposure.
BEST SUITED FOR
EVENTS & AV
MINING & EXTRACTION
CIVIL ENGINEERING
ENERGY
UNLOCK EQUITY
ASSET REFINANCING
Use equity in assets you already own as collateral. Typically borrow up to 70% of asset equity — ideal for upgrading without depleting working capital.
HOW IT WORKS
Use physical assets your business owns (or partially owns) as collateral. For example: a HGV valued at £25,000 with £5,000 remaining on HP has £20,000 equity — allowing you to borrow up to £14,000 (70%) toward an upgrade, giving total refinancing of £34,000.
BEST SUITED FOR
OWNER-OPERATORS
FLEET BUSINESSES
PLANT HIRE
HEAVY INDUSTRY
CAPITAL LEASE
FINANCE LEASE
Lease the asset until the lender has recovered its purchase value. You may share in a percentage of the sale proceeds. Offset payments against profits and reclaim VAT.
HOW IT WORKS
Finance Lease (or Capital Lease) – does not allow the opportunity for the business to own the asset outright. The business merely leases the asset ordinarily until the lender has recovered the purchase value of the asset. In some circumstances the lender may allow the business to share a percentage of the sale value of the asset once it has been sold. From an accounting perspective, businesses may be able to offset the lease payments against their profits and can reclaim VAT.
BEST SUITED FOR
PROFESSIONAL SERVICES
TECHNOLOGY
HEALTHCARE
RETAIL
FLEXIBLE USE
EQUIPMENT LEASING
The lender purchases and maintains the asset. At term end: extend, upgrade, buy, or return. Maintenance stays with the provider, not your business.
HOW IT WORKS
Once the term is complete, the business has the option to extend the lease, upgrade the asset, purchase the asset at an agreed cost or simply return it to the lender. Unlike Hire Purchase, the servicing and maintenance of the asset are the responsibility of the lender and not the business. Additionally, this type of leasing can be offset against gross profit.
BEST SUITED FOR
HOSPITALITY
MEDIA & PRODUCTION
FITNESS & LEISURE
ENGINEERING
SPECIALIST USE
OPERATING LEASE
Best for specialist machinery where you need the asset for less than its full working lifetime. No purchase obligation — simply use and return.
HOW IT WORKS
Operating Leasing – this is similar to Equipment Leasing but is generally used for specialist machinery or equipment where the business has no interest in buying the asset and where it does not expect to use the asset for the full duration of the expected lifetime of the asset.
BEST SUITED FOR
EVENTS & AV
MINING & EXTRACTION
CIVIL ENGINEERING
ENERGY
UNLOCK EQUITY
ASSET REFINANCING
Use equity in assets you already own as collateral. Typically borrow up to 70% of asset equity — ideal for upgrading without depleting working capital.
HOW IT WORKS
Asset Refinancing – this type of finance is different from a straightforward secured loan as the business can use the physical assets that it owns or in some cases it partially owns as collateral to the value of the equity within the respective asset against new finance. By way of an example, a business has a HP agreement for one of its heavy goods vehicles which it wishes to upgrade and the value of it is £25,000.00. They only have £5,000.00 left to pay on the HP agreement, and thus it has £20,000.00 of equity which can be used as collateral to refinance the new vehicle. Usually, businesses are able to borrow 70% of the equity which in this example would be £14,000.00, thus giving the business a total of £34,000.00 refinancing.
BEST SUITED FOR
OWNER-OPERATORS
FLEET BUSINESSES
PLANT HIRE