Asset finance at a glance
- Commonly associated with vehicles, machinery, plant and equipment
- Can spread the cost of acquiring qualifying assets
- Different structures can produce different ownership outcomes
- The asset itself is central to the provider's assessment
- Provider criteria vary by asset, business and transaction
Why businesses use asset finance
A business may need equipment to generate revenue but prefer not to pay its full cost from working capital at once.
Examples can include:
- construction plant
- vans and commercial vehicles
- manufacturing machinery
- printing equipment
- catering equipment
- technology or specialist equipment, depending on provider policy
Common asset finance structures
Two terms frequently encountered are hire purchase and finance lease.
They are not interchangeable.
For a detailed comparison, see hire purchase vs finance lease.
What providers commonly assess
| Area | Examples |
|---|---|
| Business | Trading history, financial performance, credit profile |
| Asset | Type, age, value, supplier and expected useful life |
| Transaction | Purchase price, deposit/contribution, requested term |
| Use | How the asset will be used in the business |
| Existing commitments | Current borrowing and finance obligations |
Requirements vary and certain specialist or older assets can be treated differently.
Asset finance versus a business loan
The key distinction is that asset finance is directly connected to a particular asset.
A general business loan may be used for broader qualifying purposes, subject to lender criteria.
Neither structure is automatically preferable; they are different forms of finance.
Example: expanding production
A manufacturer receives new orders that require an additional machine.
The company could investigate funding structures connected specifically to that equipment rather than using all available cash for the purchase.
The provider would still assess the business and the machine before deciding whether it meets its criteria.
Ownership and accounting
Asset-finance structures can have different legal, accounting and tax treatment.
Those consequences depend on the agreement and the business's circumstances, so businesses should take appropriate independent accounting or tax advice rather than relying on a general web guide.
Questions to document before seeking finance
- What asset is required?
- Is it new or used?
- Who is supplying it?
- What is the purchase price?
- How will it be used?
- How long is its expected working life?
- Is a deposit available?
- What finance commitments already exist?
Key takeaways
- Asset finance is tied to qualifying business assets.
- Vehicles, machinery and equipment are common examples.
- The provider assesses both the business and the asset.
- Different structures can affect ownership and end-of-term outcomes.
- Tax and accounting treatment should be confirmed with an appropriate professional.
See the main asset finance page or organise a potential requirement with the Funding Assessment.