What Exactly is Asset Finance and How Can It Help Your Business?


When starting up in business there are often many challenges to face when looking to raise the necessary capital to purchase new equipment. Whilst many businesses combat this through the use of business loans and bank overdrafts to increase working capital, there’s also another funding option available to assist the growth of small businesses.

Asset finance offers businesses a more specialised and direct way of funding their business growth and includes finance leasing, hire purchasing, and operating leasing. While these methods provide a means to purchase items without clogging up some much needed working capital; asset refinance can also release cash against any equity held within the business.

All of these methods overcome the challenges of allowing you to expand your business without having to raise the necessary capital.

–Hire Purchase

This allows your company to hire an asset from a leasing company over a fixed time period in return for regular payments. How it works is that the HP company purchases the item on your behalf and once the repayment period is over you own the asset.

Whether this is a piece of much needed machinery, the latest IT equipment or the all-important vehicle, HP can be a prudent way to grow your assets without tying up your working capital.

–Finance and Operating Leases 

These work in a similar way to hire purchases in that you make regular payments for the acquired item except at the end of the agreed period, you’ll not own it. Although extending leases is possible in many cases and is particularly good for vehicle leasing.

–Asset Refinance

This method can provide a much needed and vital cash injection to help your business through the early days. The idea is that you sell equipment that you own to an asset finance company that will then proceed to lease it back to you in return for regular payments.

–Import Leasing

This form of leasing can help businesses who are looking to purchase any items overseas and a company specialising in this will do all the negotiating for you. They’ll purchase the asset on your behalf before leasing it back to you at a fixed monthly rate.

–Vendor Finance

Asset finance companies will lend cash to a potential customer in order to purchase one of the vendor’s products. A percentage of its value is then forwarded back to you which is then paid back in fixed monthly instalments.

Whilst asset finance may not be for everyone it can be an ideal solution for start-up businesses who need to keep hold of as much working capital as they can whilst also looking to build their company.