Business asset finance is acquiring assets such as vehicles, equipment, machinery, and more without having to pay the full amount all at once. Businesses or business proprietors use this solution to finance their business when they do not have the cash to pay for it for the time being. This allows them to spread the payment costs over time and make smaller payments on a fixed term as agreed by the lender.

You find yourself in a situation where you find potential to scale your business further, but right now you don’t have the financial resources to do so. You firmly believe that this is the right time to expand and grow based on the analysis you did. It might be too late to wait any longer, and you might miss the opportunity.

You then had a great idea. And this idea is why not ask for financial assistance, right? Now, you start searching for asset finance and are now trying to look for the best with impressive rates and an extensive background and credibility.

But what is asset finance in the business world? This blog will educate you on the things you need to know to scale your business from small to corporate level; that is, of course, if the odds are in your favour and you can do so in due time with the right asset finance broker.

Key Takeaways

1. Business asset finance helps companies get assets like machines, vehicles, or equipment without paying everything upfront.
2. Options include hire purchase (own it later), finance lease (rent it long-term), operating lease (short-term use), and asset refinancing (use what you own to get cash).
3. Saves cash, offers flexible payments, provides tax benefits, and gives access to the latest equipment.
4. Consider the total cost, how long you’ll need it, and how the asset loses value.

Types of Asset Finance

1. Hire Purchase
2. Finance Lease
3. Operating Lease
4. Asset Refinancing

1. Hire Purchase: This arrangement allows a business to use an asset while paying for it in installments. Ownership transfers to the business after the final payment. It’s ideal for companies looking to own the asset eventually without a large initial expenditure.​
2. Finance Lease: In a finance lease, the finance company purchases the asset and leases it to the business for an agreed period. The business uses the asset and makes regular lease payments. While the business doesn’t own the asset, it assumes many of the risks and rewards associated with ownership.​
3. Operating Lease: This type of lease is typically shorter than the asset’s useful life. The finance company retains ownership and may provide maintenance services. It’s suitable for businesses needing assets for a specific period or project without the intention of ownership.
4. Asset Refinancing: This involves “using existing assets as collateral” to secure a loan. It’s a way to release capital tied up in owned assets to improve cash flow or fund new investments.

Benefits of Asset Finance

1. Preserves Working Capital
2. Flexible Payment Structure
3. Access to Up-to-Date Equipment
4. Tax Efficiency

• Preserves Working Capital: Businesses can maintain their normal day-to-day operations since they do not have to pay the full amount needed to acquire said assets.
• Flexible Payment Structures: The agreements can be modified based on the financial standing of the business balanced with interest rates that is best suited for the business’ situation.
• Access to Up-to-Date Equipment: Businesses will have access to latest and up-to-date equipment that ensures the elimination of having to worry about issues when using such assets.
• Tax Efficiency: Payments made under asset finance agreements “can often be deducted as business expenses”, potentially reducing taxable profit.​

Pros and Cons of Business Asset Finance

 

 

Considerations Before Opting for Asset Finance

While asset finance offers numerous advantages, it’s essential to consider:

• Total Cost: The overall expense may be higher than purchasing the asset outright due to interest and fees.​
• Commitment: Make sure you are confident you can make the payment for example, 5 years; otherwise, the finance provider repossesses the asset.
• Asset Depreciation: Understand how the asset’s depreciation affects the agreement, especially if there’s an option to purchase at the end.​

Is Asset Finance Right for Your Business?

Consult with asset finance brokers first before you proceed to avail yourself of asset finance for your business to avoid getting yourself in a situation where you have already signed a contract and can no longer be insolvent.

To guide you more on this decision, FLA’s latest statistics:

In January 2025, commercial vehicle finance grew by 10%, and IT equipment finance rose by 43%. However, the business new car finance sector saw a 2% decrease compared to the same month in 2024.

New data from the Finance & Leasing Association (FLA) shows that asset finance, including leasing and hire purchase, increased by 2% in January 2025 compared to January 2024. Over the past year, business activity was up by 3%.

Source: FLA Research Team

Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, quoted: “The asset finance market reported a second consecutive month of growth in January with the commercial vehicle finance sector making a strong start to 2025. New asset finance lending to SMEs grew in January by 2%, while to larger businesses held steady.

“The FLA’s Q1 2025 industry outlook survey suggests that more than three-quarters of asset finance respondents expect some increase in new business over the next year despite a challenging economic environment. Supporting businesses to invest in greener assets and more efficient technology in a lower interest rate environment should contribute to single-digit new business growth over the next year.”

The statistics above show that it is positive news for businesses to opt for asset finance this year.

Partner with Us for Your Asset Finance Needs

MacManus Asset Finance has been in the industry for 25 years, helping businesses big or small around the UK reach the level where they need to be. We have been awared Business MoneyFacts Broker of the Year 2024 as proof that we go beyond just providing you with what you need. Contact us today to explore how we can support your growth and operational efficiency.

Final Thoughts

Business asset finance helps companies get the equipment they need without spending all their money at once. It’s a smart way to keep cash available for other expenses. By learning about different options and thinking about what your business needs, you can make choices that help your company grow.

Business Asset Finance FAQs

1. What is business asset finance?
   It’s a way for businesses to get equipment or vehicles without paying all at once.
2. How is it different from a loan?
   Asset finance uses the asset as security, often with lower interest rates than loans.
3. Can I own the asset later?
   Yes, with a hire purchase. Leases usually don’t offer ownership.
4. Is this good for small businesses?
   Yes, it’s helpful for managing cash flow without big upfront costs.
5. Are there tax benefits?
   Often, yes. Payments might be tax-deductible.