Asset Lending

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What is Business Asset Funding and how does it work?

Business asset funding involves paying an agreed, recurring fee for use of the asset over an agreed time period, negating a large initial capital outlay and maximising consistent cash flow. The most common types of asset lending are leasing and hire purchase. Asset lending can be broken down into five categories:

Finance Leasing

Providing flexibility and freedom, finance leasing is akin to renting the equipment in return for regular, typically monthly payments, that can be offset against taxable profit. Finance leases tend to run between one and five years and upon cessation, return of the leased product is contractually required.

Hire Purchase (HP)

Allowing companies to spread the cost of purchase, an HP agreement is comparable to finance leasing but at the end of the contractual period, instead of handing back the equipment, you own it.

Contract Hire

Contract hire is generally offered for vehicles or larger, industry specific equipment like tractors and diggers. Repayments are calculated on the value of the asset and are spread over a specific term.

Operating Lease

Operating leases tend to be suited to intangible, technology-based purchases, with payments only being made until the expiry date of agreement. If the asset stops benefiting the company, a bulk, one-off payment is made covering the difference between original price and the residual value.


Refinancing allows payment schedule revisions, or taking advantage of better rates or products not available on inception of the original agreement, as well as being useful for those with poor credit ratings. Consolidating numerous credit cards into one loan removes multiple lines of credit and varying interest rates, alongside product-specific benefits or promotions such as 0% on balance transfers.

Who is Business Asset Funding aimed at?

Any business, from startup to global empire can make use of asset lending, irrespective of their size, turnover or sector. Reassessing current credit and refinancing to ensure maximum efficiency is good practice for all companies.

When should you use Asset Funding?

As a flexible alternative to bank loans, purchasing equipment through asset lending will spread the cost of the product into smaller portions, removing the need for large capital expenditure and enabling growth without financial over-stretching.

Where can you get a Business Asset Loan?

Asset funding is usually provided by the manufacturers of the product or equipment, with some arranging agreements in-house while others choose to outsource their contractual agreements to a third party company.

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