The Complete Guide to Asset Finance
📅 Updated 31 July 2026 • ⏱️ 8 minute read
Investing in vehicles, machinery, equipment or technology can help a business grow, improve efficiency and take advantage of new opportunities. However, paying the full purchase price upfront can place unnecessary pressure on working capital.
Asset finance provides an alternative way to acquire essential business assets by spreading the cost over an agreed period. This can allow a business to use the asset and benefit from it straight away while retaining cash for wages, stock, marketing and other day-to-day requirements.
What is asset finance?
Asset finance is a form of business funding used to purchase, lease or release capital from business assets.
Rather than paying the full cost upfront, the business usually makes regular payments over an agreed term. The available structure will depend on the asset, the business’s circumstances and whether it ultimately wants to own the asset.
Asset finance may be suitable for established companies, growing SMEs, sole traders and new businesses, although the options and criteria will vary between lenders.
What can be funded?
Asset finance can be used across a wide range of industries and for many different types of equipment, including:
- Cars, vans and commercial vehicle fleets
- Construction plant and machinery
- Agricultural vehicles and equipment
- Manufacturing and engineering machinery
- Warehouse and materials-handling equipment
- Medical and dental equipment
- Office furniture and equipment
- IT hardware and technology
- Renewable energy equipment
- Hospitality and catering equipment
Both new and used assets may be considered, subject to the lender’s requirements. The age, condition, anticipated lifespan and resale value of the asset may all influence the available finance.
What are the main types of asset finance?
There are several ways to fund business assets. The most suitable option will depend on the nature of the purchase, the business’s objectives and what it wants to happen at the end of the agreement.
Hire Purchase allows a business to acquire an asset and spread the cost over an agreed term.
The business normally pays an initial deposit followed by fixed monthly repayments. The lender owns the asset during the agreement, but ownership can usually pass to the business after the final payment and any applicable purchase fee have been made.
Hire Purchase can be suitable for businesses that:
- Want to own the asset eventually
- Prefer predictable monthly payments
- Plan to retain the asset for several years
- Do not want to pay the entire cost upfront
The asset will usually act as security for the finance
Under a Finance Lease, the lender purchases the asset and leases it to the business for an agreed period.
The business makes regular rental payments and is responsible for maintaining and insuring the asset. At the end of the primary term, there may be options to continue renting it, arrange its sale or enter a secondary rental period, depending on the agreement.
A Finance Lease may appeal to businesses that want to use an asset without necessarily purchasing it outright.
An Operating Lease provides use of an asset for a set period, which is often shorter than its full working life.
The asset is normally returned to the finance provider at the end of the agreement. This may suit businesses that regularly replace vehicles, technology or equipment and do not want to retain older assets.
Operating Leases may also include servicing or maintenance, although this depends on the provider and the individual agreement.
Asset Refinance allows a business to release capital tied up in assets it already owns.
The lender assesses the asset’s value and may provide funding secured against it. The business continues using the asset while making repayments under the new agreement.
This can help a business:
- Improve working capital
- Support expansion
- Fund a new project
- Consolidate other business borrowing
- Invest in additional equipment
The amount available will depend on factors such as the asset’s value, age, condition and marketability.
What are the benefits of asset finance?
Asset finance can offer several potential advantages.
Spreading the cost of an asset may allow the business to keep more cash available for its everyday operations and future plans.
Instead of paying for an asset before it starts generating value, repayments can be spread across the period in which the business is using it.
Many businesses choose asset finance because it can:
- Offer fixed monthly repayments
- Preserve working capital
- Improve cashflow
- Spread the cost of investment
- Access newer equipment
- Maintain business growth
- Avoid large upfront purchases
Many asset finance agreements use fixed monthly repayments, helping the business budget and plan its cash flow.
Asset finance may help a business replace outdated equipment or invest in technology that could otherwise be difficult to fund through a single upfront payment.
Different types of asset finance are available depending on whether the business wants to own, lease, replace or release capital from an asset.
Because the finance is normally secured against the asset being funded, it may not always be necessary to offer other business or property assets as security. This will depend on the lender and application.
What will an asset finance lender consider?
Every lender has its own appetite and criteria, but an assessment may include:
- The amount being requested
- The type and cost of the asset
- Whether the asset is new or used
- The asset’s expected lifespan
- Its likely future value and resale market
- The trading history of the business
- Recent company accounts or management information
- Bank statements and cash-flow performance
- The applicant’s credit history
- The proposed deposit
- The length of the finance agreement
For newer businesses, lenders may also consider the directors’ experience, business plan, financial forecasts and personal credit profiles.
Providing clear and accurate information at the beginning can help the lender understand the proposal and may prevent avoidable delays.
Can a new business obtain asset finance?
Asset finance may be available to start-ups and recently established businesses, although the choice of lenders can be more limited.
A lender may request:
- A detailed business plan
- Cash-flow forecasts
- Evidence of relevant industry experience
- A larger initial deposit
- Personal guarantees from the directors
A strong application should explain why the asset is required, how it will support the business and how the monthly repayments will be maintained.
Can used equipment be financed?
Used assets can often be funded, but lenders will consider the asset’s age and condition at both the beginning and end of the proposed term.
Specialist or highly bespoke equipment may require additional consideration because it could have a more limited resale market.
It is sensible to discuss the proposed purchase before making a non-refundable commitment to the supplier.
How much deposit is required?
Deposit requirements vary depending on:
- The type of asset
- The lender
- The strength and trading history of the business
- The applicant’s credit profile
- Whether the equipment is new or used
- The overall finance structure
Some proposals may require a relatively modest initial payment, while others may need a larger contribution. There is no single deposit requirement that applies to every asset finance application.
How long does asset finance take to arrange?
Straightforward applications can sometimes progress quickly, particularly where the asset, supplier and financial information are clearly documented.
Larger, more complex or specialist proposals may require additional underwriting, valuations or supporting information.
Starting the finance conversation before agreeing a purchase can help establish whether the proposed asset and supplier are acceptable to suitable lenders.
Is asset finance suitable for every business?
Asset finance will not be the right solution in every situation. Before proceeding, a business should consider:
- The total cost over the full term
- Any arrangement or documentation fees
- Whether payments are fixed or variable
- Maintenance and insurance responsibilities
- Early repayment provisions
- End-of-agreement options
- The consequences of missed payments
- Whether ownership is important
- How long the asset is likely to remain useful
The lowest monthly repayment is not necessarily the best overall option. The finance structure should reflect the expected use of the asset and the wider objectives of the business.
Finding the right asset finance solution
Different lenders specialise in different asset types, industries and business profiles. A provider that is comfortable funding a fleet of commercial vehicles may not necessarily be the most suitable option for manufacturing machinery or specialist agricultural equipment.
At Liberty Verado Commercial, we take the time to understand the asset, the business and the purpose of the funding before exploring the available options.
Whether you are purchasing new equipment, replacing existing machinery, expanding a vehicle fleet or releasing capital from assets you already own, we can help you consider the most appropriate route.
Still Have Questions?
Speak to Liberty Verado Commercial about your asset finance requirements.
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