How tradespeople can use asset lending to get ahead before busy season

During spring and summer, thousands of plumbers, electricians, builders, and other tradespeople compete for the same contracts as work picks up across the UK. And some will do better than others because they’ll have prepared early – getting the right equipment, vehicles, and funding sorted before everyone else starts scrambling.

Compare the difference between a heating engineer who’s ready with diagnostic equipment for a summer of air conditioning installations, with one who’s just starting to look for funding for a new thermal imaging camera they desperately need. The prepared business wins the contracts, while the unprepared one likely misses out.

With 870,000 construction SMEs operating in the UK – more than any other sector – competition is high. But many tradespeople are using asset lending to get ahead, tapping into the £39.7 billion in asset finance provided to UK businesses in 2024 alone.

In this article, we’ll explain how you can use asset lending to prepare for the busy season, the benefits and risks of asset lending, and how the application process works.

Key points:

• Asset lending lets you get essential equipment and vehicles through tools financing, van finance, and other flexible options without major upfront costs

• Different trades can access anything from £1,000 for sole traders to over £50 million for larger companies, with 96% approval rates compared to 44% for traditional bank loans

• 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 asset lending?

Asset lending is simply using the equipment or vehicle you want to buy as security for a loan. So instead of a lender looking at your business accounts and taking a bet that you’ll be able to meet your repayments, they’re thinking, “If something goes wrong, we can always take back the van.”

It’s a bit like buying a house with a mortgage – the house itself secures the loan, which means the bank will be more willing to lend you money (and perhaps at a more competitive interest rate). Using the asset as security reduces the risk for lenders, which may explain why asset lending has a 96% approval rate compared to just 44% for traditional bank loans.

There are three main types of asset lending:

• Hire purchase: This allows you to pay for an asset in instalments over a period of time. Once all payments are completed, ownership of the asset is transferred to you. The asset itself often serves as collateral for the loan

• Asset refinancing: This involves using assets you already own to secure a new loan. It allows you to free up capital tied up in assets for other business uses, with the assets serving as security for the loan

• Invoice financing: Although not directly tied to physical assets like equipment or vehicles, it uses your unpaid invoices as collateral to secure a loan

Asset lending is part of the broader asset finance market, but it specifically focuses on using your business assets as security. The UK asset finance industry now funds around a third of all business investment in vehicles, machinery, and equipment.

How can asset lending help tradespeople get ahead before the busy season?

Getting your equipment sorted before everyone else starts scrambling gives you a massive head start and reduces last-minute stress and hassle.

Here’s how asset lending makes that possible:

• Getting the right equipment in time: Whether you need scaffold equipment for spring construction work or diagnostic tools for summer air conditioning callouts, having the right kit ready means you can say yes to jobs others aren’t ready to handle

• Protecting cash flow: Instead of spending £25,000 on a new van, you can keep most of that money in the bank for wages, materials, and unexpected opportunities

• Growing your business quickly: Asset lending lets you expand your fleet or upgrade equipment without waiting months to save up the cash

• Beating the competition: While others are still pricing jobs around renting equipment, you can offer better rates and faster turnaround because you own (or are buying) your tools

Timing is really important in the construction sector since demand for workers and equipment goes up a lot during the busier seasons of spring and summer. If you arrange your equipment financing early, you’re more likely to avoid delays and high seasonal prices. And that can result in less stress, smoother projects, and a better chance to win jobs while others are still trying to catch up.

Plus, when you’ve got reliable tools and vehicles, you can take on bigger or more jobs with confidence. This will help gain you a reputation for reliability which can help lead to the kind of repeat business that makes the difference between a good year and a great one.

When should you apply for asset lending before the busy season?

The timing of your application is crucial if you want your equipment to be ready by the time work picks up. Most finance applications take 2-8 weeks from start to finish, but that’s before you factor in equipment delivery times.

In the construction industry, where work typically ramps up between April to September, you’ll typically want to finalise your financing by February at the latest. But different trades have different busy periods. For example, HVAC businesses often deal with two seasons – summer air conditioning work and winter heating emergencies.

An effective approach is to consider starting your applications 3-6 months before you need the equipment. This might seem early, but it will mean you won’t be competing with everyone else, you can be pickier about your options, and some equipment has long delivery times.

If you’re looking for government support, the Growth Guarantee Scheme – which provides 70% government backing for loans up to £2 million – runs until March 2026. But even government-backed schemes take time to process, so early applications are still important.

How much can different-sized trade businesses borrow?

The amount you could borrow with asset lending will depend mainly on your business size, trading history, and the type of equipment you want to finance.

• Sole traders: Typically able to borrow around £1,000 to £100,000. Lenders usually want 6-12 months of trading history and may require personal guarantees since lending is often assessed on both the business and personal creditworthiness

• Small teams (2-10 employees): Can usually borrow around £25,000 to £100,000, with lenders focusing more on business performance than solely personal credit. This size fits many smaller SMEs, which benefit from government-backed schemes like the Growth Guarantee Scheme that improve approval chances

• Medium businesses (10-50 employees): Can typically access facilities in the £100,000 to £2 million range. The British Business Bank’s Growth Guarantee Scheme, for example, supports lending facilities up to £2 million for smaller businesses up to £45 million turnover

• Larger companies (50+ employees): Borrowing usually starts at around £5 million and can reach £150 million or more, especially when the borrowing is secured against property or specialised asset portfolios. These deals are typically structured differently with longer terms and bigger facilities

Over 90% of government-backed lending facilities support businesses with fewer than 50 employees, which means smaller and medium trades have good access to these types of loans. Plus, Start Up Loans provide funding of up to £25,000 at a fixed 6% interest rate for newer and smaller businesses, helping those with less trading history to access asset lending or working capital.

Remember, you don’t need to borrow the maximum amount available. Sometimes a smaller loan with more attractive terms can work out cheaper in the long run.

How quickly could you get funding?

The speed will vary depending on the type of funding you’re after and where you apply. The fastest options can get money in your account within 24-48 hours, while more complex applications might take several weeks.

Online lenders and specialist asset finance companies tend to be the quickest. They use automated systems to assess applications, which means decisions can happen in hours rather than days. Asset finance applications typically process within 3-7 days once you’ve submitted all the paperwork.

Traditional high-street banks are slower but not necessarily better. You might wait 1-4 weeks for a decision, and then another week or two for funds to arrive. The extra time doesn’t usually translate into better rates or terms either – it’s just how their systems work.

Government-backed schemes like the Growth Guarantee Scheme typically take 1-2 weeks after approval, assuming you’re working with an accredited lender. The government backing helps with approval rates, but it doesn’t speed up the process much.

But speed isn’t just about the lender. Your level or preparation will make a huge difference, too. So make sure your business accounts, bank statements, and equipment quotes are ready before you apply. Applications are often delayed because businesses submit incomplete information and then need to provide more documentation later on.

What are the benefits and risks of using asset lending for the busy season?

Like any business decision, asset lending comes with advantages and potential downsides.

Benefits

• Keep cash in the bank: Instead of spending £40,000 on equipment, you might put down £4,000 and keep £36,000 in the bank for opportunities, emergencies, or day-to-day expenses

• Get better equipment: Higher-quality tools and vehicles often last longer and work more efficiently, potentially saving money in the long run through reduced repairs and downtime

• Tax savings: Depending on the structure, you might be able to claim capital allowances, depreciation, or lease payments against your tax bill

• Beat competitors: Having reliable, modern equipment helps you take on jobs that others can’t handle, also potentially enabling you to charge higher rates

• Easy budgeting: Fixed monthly payments can make budgeting easier than unexpected repair bills on old equipment

Risks

• Monthly payments: You’ll need to make payments year-round, even during quiet periods, which can put pressure on your cash flow if work dries up

• Could lose equipment: If you can’t keep up with the repayments, the lender can repossess the equipment, potentially leaving you unable to work

• Costs more overall: Over the full loan term, you’ll pay more than the cash price if you bought it outright, although this needs to be weighed against the business benefits of having the equipment

• Equipment might lose value: With hire purchase, you own an asset that might be worth less than you’d owe if equipment values fall unexpectedly

• Rules about usage: Some lease agreements limit how you can use equipment or require you to maintain it to certain standards

To decide whether it’s worth it, you’ll need to match the risks to your business situation. For example, if you’ve got steady contracts and predictable income, monthly payments will be less risky for you. But if your work’s highly seasonal or unpredictable, you’ll need to be more careful about committing to fixed costs.

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.

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FAQs

What happens if I can’t make repayments during slower seasons?

Most lenders would rather work with you than repossess equipment, so contact them as soon as you see problems coming. You might be offered a payment holiday or reduced payments, and some agreements even include seasonal payment structures.

Can I get asset lending with bad credit?

Asset finance is often easier to get with poor credit than traditional loans because the equipment acts as security. Your rates might be higher, but approval is still possible, especially for larger businesses.

Do I need to put my home at risk as security?

Most asset finance is secured against the equipment itself. But you might need to provide a personal guarantee, which is different from using your home as security but still creates personal liability.

Which asset lending products are realistic for my business size and will actually get approved?

Sole traders typically get approved for hire-purchases up to £100,000, while small companies can access most products up to £2 million. The key is applying to lenders who specialise in your business size.

How does asset lending affect our balance sheet and financial ratios?

Both hire-purchase and finance leases appear as assets and liabilities on your balance sheet under current accounting standards. Your accountant can model the impact before you commit.

What are the exact tax implications of different asset lending structures?

Hire-purchase lets you claim capital allowances plus interest deductions, while leases allow you to deduct payments as business expenses. The right option for your business will depend on your profit levels and tax position.

What documentation should we prepare for each lender type?

Traditional banks usually want full accounts and business plans, while asset finance specialists focus on bank statements and equipment quotes.

What’s the minimum trading history needed to qualify for asset lending?

Most lenders want at least six months of business trading, but some will work with newer businesses. Ultimately, they want to see a consistent income rather than a certain amount of time in business.

Which government schemes are available?

The Growth Guarantee Scheme provides 70% backing for loans £25,001-£2 million until March 2026. Start Up Loans offer up to £25,000 at 6% fixed rates for newer businesses.

How do startups successfully use asset lending to scale without overextending?

Successful startups often start small and build up a solid payment history before taking on larger commitments. They focus on equipment that directly generates revenue rather than nice-to-have items.

What’s the difference between tool financing and equipment leasing?

Tool financing usually means hire-purchase, where you buy equipment over time and own it at the end. Equipment leasing means you rent equipment and return it, although you might have the option to buy it at the end of the lease.

Is van finance different from regular vehicle finance?

Van finance is basically vehicle finance for commercial vehicles, but you might get more flexible terms and better tax relief since lenders understand that vans are business tools rather than personal purchases.

Can I combine different types of asset lending?

Yes, many businesses use multiple types – hire-purchase for vans, leases for short-term equipment, and invoice finance for cash flow, for example. But it’s important not to overcommit yourself with too many monthly payments.

What happens to the asset if my business fails?

With hire-purchase you might sell the asset to pay off some debt, while with leasing you’d return the equipment. Personal guarantees could make you liable for shortfalls, but if your business fails it doesn’t automatically mean that you’ll lose everything.

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.