Asset Finance

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What is Asset Finance?

Asset finance lets businesses gain access to assets like machinery, technology, vehicles, etc., without paying the entire cost upfront. The asset cost gets spread over the entire life of the asset in monthly repayments towards servicing a secured debt whose security is the asset itself. Because of this collateral, the rates afforded to asset finance are significantly lower than unsecured personal loans and other means of financing.

Asset finance enables a business to acquire assets using finance, rather than spending the money upfront. These assets can include machinery, vehicles, tools, IT equipment, or any other assets the business needs. Depending on the agreement, the business may eventually own the assets, or simply make regular payments to use them. 

In the UK, asset finance has seen notable growth, with the Finance & Leasing Association (FLA) reporting that in the first half of 2026, £21 billion was provided to businesses to purchase equipment, machinery and vehicles. Of the £21 billion, approximately £13 billion was provided to SMEs. 

For businesses, the benefits are not merely funding growth and development within the business; it’s capital preservation. Rather than using working capital to fund asset purchases, businesses can leave working capital untouched and acquire the assets they need, without putting excessive financial strain on the business.

Asset Finance For Business

Types of Asset Finance Available

The three main types of asset finance are hire purchase, leasing and refinancing. 

Hire purchase

With hire purchase, the asset is financed by the lender, while the business makes payments to use it. At the end of the term, the business takes ownership of the asset.

Leasing

In a leasing agreement, the business pays to use an asset, with no promise of ownership at the end of the lease term. This agreement may be suited to businesses that value flexibility over ownership.

Refinancing


Refinancing is a tool used to release capital by using an existing asset as collateral for capital release. In most cases, the business continues to use the asset while simultaneously accessing capital from the asset.

Finance terms

Typical finance terms run anywhere between 2 and 7 years. Commercial vehicles and construction plant are normally financed over 2-7 years. But IT and technology equipment is usually financed over shorter time periods, like 2-4 years, because they can become outdated much quicker.

In the UK, hire purchase is the most popular, with the FLA noting in a 2026 state of the market report that hire purchase agreements accounted for 53.2% of new agreements, while lease agreements accounted for 26% of agreements. 

Benefits of Asset Finance for UK Businesses

For UK businesses, the most obvious benefit of asset finance is cash flow protection. 

Suppose you need to purchase equipment for £100,000. Purchasing this outright may cause substantial pressure on your cash flow. Rather than funding an asset with working capital, businesses can spread it out over a period of time.

Then, working capital can be used for growth initiatives such as marketing, or simply as a cash buffer to manage regular monthly expenses like wages, inventory, or rent. According to findings from the British Business Bank, 50% of smaller UK businesses seeking external finance in 2025 did so specifically for working-capital purposes.  

Asset finance may offer potential VAT and tax advantages for UK businesses through allowable deductions and capital allowances. However, VAT treatment depends on the specific finance structure. 

According to HMRC, hire purchase is typically treated as a supply of goods, with VAT applying to the cash price of the asset, while separately disclosed credit charges may be exempt from VAT. On the other hand, leasing is generally treated as a supply of services.

Always consult a professional for tax advice, as different asset finance agreements may affect how assets and liabilities are treated on the balance sheet.

Assets You Can Finance

Asset finance can be used for most tangible business assets with a value and reasonable lifespan. 

Some of the most common assets financed by UK businesses include the following:

According to the Finance & Leasing Association, more than £40 billion was spent on new asset finance in 2025. 

The top 3 categories were cars (£13.4bn), commercial vehicles (£10.8bn), and plant and machinery (£7.8bn).

Getting Asset Finance with ABC Finance

ABC Finance was established in 2000 and is regulated by the Financial Conduct Authority. As a whole-of-market broker, we assist UK businesses in finding specialist lenders tailored to your asset finance needs. We work with limited companies, LLP’s, sole traders, or partnerships.

What you need to apply?

For smaller asset finance applications, you may only need business details, plus the asset quote/invoice. However, if you’re a startup or newer business, you may need to provide a business plan. 

For larger applications, you may need 2-3 years of business accounts, bank statements, a list of existing financial commitments, and ID books of directors/owners. Lenders may also consider factors such as your business credit score, trading history and ability to make regular monthly payments.

How long will an application take?

Straightforward applications may be approved within a few hours, or a day or two. Larger applications may take several days to approve. However, more complex cases can take up to one or two weeks before being approved.

Use this calculator to estimate your monthly repayment cost or reach out for a personalised quote.

Note: The rates and figures shown in this article are for informational purposes only and do not constitute financial advice. Asset finance rates change frequently and depend on your individual business profile, asset type, and the lender’s criteria at the time of application. For a tailored assessment of what is currently available to you, speak to our team at ABC Finance.