What does an asset finance company do – and how to choose the right one

Asset finance companies specialise in helping businesses get the assets they need without paying upfront. They provide funding options like equipment leasing, hire purchase, and refinancing, allowing you to spread the cost over time. This allows you to keep your working capital free for other investments or expenses.

These financing companies work with businesses of all sizes, from startups to large corporations, across various sectors like construction, agriculture, and IT.

With a 96% success rate for applications, asset finance is often more accessible than traditional loans. And whether you’re scaling up or managing cash flow, asset finance offers flexibility that traditional loans can’t.

In this article, you’ll learn what asset finance companies do and who they serve, the benefits and functions of asset finance companies, and how to choose the right asset finance company for your business.

Key points:

• Asset finance companies are specialist lenders that help businesses acquire or refinance assets

• Choosing the right one involves comparing interest rates, fees, flexibility, speed, service, suitability and reputation

• Funding Options by Tide can help when optimisation of working capital isn’t enough, offering access to business finance up to £20 million

What is an asset finance company?

An asset finance company is a specialist lender that helps businesses acquire or refinance assets. They offer a range of funding options, including leasing, hire purchase, and refinancing, which allow you to spread the upfront cost of the assets over time.

Asset finance companies serve businesses of all sizes, from startups to large corporations, across various sectors like construction, agriculture, and IT. With a 96% success rate for applications, asset finance is often more accessible than traditional loans. Whether you’re scaling up or managing cash flow, asset finance offers flexibility that traditional loans can’t.

These companies understand that every business has unique needs, and they can tailor their solutions to fit your specific requirements – whether you need a new fleet of vehicles, state-of-the-art machinery, or the latest technology.

What does an asset finance company do?

Asset finance companies provide funding for assets like equipment, vehicles, and technology without requiring large upfront payments. They offer tailored products such as leasing, hire purchase, and refinancing to match your business needs.

One of the main benefits of working with an asset finance company is that they help you spread the cost of important assets over time. This frees up your working capital, allowing you to invest in other areas of your business in the meantime – you can get the latest equipment for your team without worrying about a huge upfront cost.

With a 96% success rate for applications, asset finance is often more accessible than traditional loans. And this high success rate means that even if you have limited credit history, you still have a good chance of getting approved.

Another advantage of choosing an asset finance company is their speed of approval. Some companies can make decisions within hours, allowing you to get the assets you need incredibly quickly. This speed can be crucial if your business needs to act fast to act on new opportunities or simply to keep operations running smoothly if cash flow becomes tight.

What types of asset finance products do lenders offer?

Asset finance companies offer a range of products to meet a wide variety of business needs.

Popular UK asset finance companies

The UK has a range of asset finance companies to consider, each offering unique benefits and specialties.

• Lombard (NatWest Group): The largest UK provider, offering hire purchase, leasing, and sale-and-leaseback options. They serve various sectors including vehicles, agriculture, and renewable energy.

• HSBC: A global bank with flexible hire purchase and leasing options, including green finance incentives for SMEs and multinationals.

• Investec: Known for quick, relationship-driven solutions aimed at SMEs, including sustainable energy projects.

• Aldermore: An award-winning challenger bank offering flexible asset finance services across construction, transport, and agriculture sectors.

• Novuna Business Finance: Specialises in fast equipment finance decisions and fleet finance, supporting diverse industries with transparent terms.

• Close Brothers: Focuses on personalised service and flexible financing for machinery, vehicles, and equipment to preserve cash flow.

• BNP Paribas Leasing Solutions: Provides comprehensive solutions for industrial equipment, transport, IT, and green energy sectors.

• ABN Amro and Société Générale: Both offer flexible leasing options and focus on innovative and sustainable finance.

• Allica Bank: Known for flexible financing options and strong SME support.

• Independent Brokers: Firms like HH Business Finance are significant players, especially for SME finance.

These companies differentiate themselves through their scale, range of financing options, speed of decision-making, and approach to customer service. By choosing the right provider, you can make sure that your business gets the assets it needs in a way that works for your current financial situation and future growth plans.

How to choose the right asset finance company

Choosing the right asset finance company involves considering a number of factors to give yourself the best chance of getting the most suitable deal and service for your business.

First, you’ll want to look at the interest rates and fees. Compare the APRs (how much you’ll pay in total) and watch out for any hidden costs (such as arrangement fees or early repayment penalties) that could add up over time. It’s important to understand the total cost of financing, not just the monthly payments, because what might look like a great deal at first glance could end up costing you more over time.

Next, consider the flexibility of the finance options. For example, can you make early repayments without penalties? And are there options to upgrade your assets during the term? Flexibility is particularly important for businesses that anticipate their needs or growth plans changing over time.

It’s also important to make sure the lender specialises in financing the type of assets you need since some lenders focus on specific industries or asset types. Finding one that aligns with your business should make the process smoother and much more efficient.

Speed and service quality are other factors you may want to consider. So find out how quickly the lender can process your application and approve the funding. Fast approval times can be a big advantage if you need to secure assets quickly to make the most of business opportunities or to keep operations running when you’re in a pinch.

Finally, it’s smart to do some research on the lender’s reputation. You could read online reviews and even ask for references from other businesses they’ve worked with before. Good customer service and a solid track record can help give you the confidence to choose one lender over another.

What common mistakes can be avoided?

When you’re choosing an asset finance company, you’ll need to be aware of several common pitfalls to ensure you make the best decision for your business.

• Overlooking the total cost of financing: It’s easy to focus on the monthly payments, but you should also consider the APR and any additional fees. This will help you avoid surprises and make sure you’re getting a good deal.

• Ignoring the details of the contract: Pay close attention to the terms and conditions, including any penalties for early repayment, mileage limits for vehicles or obligations at the end of the term. Figuring this out upfront could save you from unexpected costs or complications later on.

• Choosing the wrong type of finance product: Make sure the type of finance you choose matches your business goals. For example, if you plan to use an asset long-term, hire purchase might be a more suitable option than leasing. On the other hand, if you need flexibility to upgrade equipment regularly, leasing could be more suitable.

• Not shopping around: By comparing offers from at least three different lenders or working with a broker, you’re more likely to find the best deal for your needs and budget.

Find business finance with Funding Options by Tide

Whether you’re looking for a standard business loan, a short-term business loan, or something a little more specialist, like auction finance for property developers, we’re one of the leading names in business finance in the UK, having helped facilitate over £1 billion in finance to more than 20,000 customers.

Checking if you’re eligible is free, only takes a few minutes, and while a full application would impact your personal or business credit score, checking eligibility won’t. Just submit your details via the link below to find out if you could be eligible to borrow up to £20 million.

Find business finance.

FAQs

How long does asset finance approval take?

Online and alternative lenders can sometimes approve asset finance within 24–48 hours, especially for straightforward applications. Traditional banks and high street lenders may take anywhere from two to six weeks, depending on the complexity of the deal, the size of the asset, and your financial situation.

Can I get asset finance with bad credit?

Yes, in many cases. While a poor credit history can make approval more difficult, some lenders focus more on your business’s cash flow, the security provided by the asset, or your trading history rather than credit score alone. Specialist lenders and brokers may also help businesses with bad credit find suitable options.

What happens if I default on payments?

If you default, the lender has the right to repossess the financed asset since it serves as security for the loan. But many lenders will aim to work with you first, possibly offering payment restructuring, short-term payment holidays, or refinancing to avoid repossession where possible.

Is asset finance tax-deductible?

Usually, depending on the structure of the agreement. Operating lease and hire purchase payments are usually tax-deductible against profits, but the specifics will vary depending on whether it’s a lease, hire purchase, or finance lease. Tax treatment can be complex, so it’s best to seek professional advice.

Can startups qualify for asset finance?

Startups can often access asset finance, but they may need to provide additional security, a deposit, or personal guarantees. Using a broker can improve the chances of approval, and many lenders offer products tailored to new and early-stage businesses.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.