Asset finance: your top questions answered

When looking for finance, we know the options can sometimes be overwhelming. If you are looking to fund new or used vehicles, purchase stock or new equipment, or free up capital tied up in existing assets, then asset finance may be right for you.

Unlike a traditional business loan, which can be used for any legitimate business purpose, asset finance is used to purchase a specific business asset. This asset is used as security, meaning that asset finance is often cheaper than other types of loans.

Here we answer the most common questions around this type of business finance. 

What types of assets can be funded?

You can use asset finance for most types of business asset. Some of the most popular are: 

• Equipment – manufacturing, production, engineering, agricultural, forestry, waste and recycling, materials handling

• Plant and Construction – industrial plant and machinery, road plant, forklifts, access platforms, cranes and pavers, diggers

• Transportation – heavy commercial vehicles and trailers, cars and light commercial vehicles (including business fleets, and car and van rentals), buses and coaches

• Machinery – machine tools (metal engineering and plastic production), bespoke manufacturing machinery, packaging and other production

• Green Energy – solar panels, biomass generators, wind turbines, heat pumps, LED lighting, battery storage

Can I refinance existing vehicles, equipment or machinery to free up cash flow?

Yes, you can apply for asset finance to borrow against any existing assets such as vehicles, machinery or other equipment valued at £10,000 or more. The asset is used as collateral for the loan, and could help you get a lower interest rate than an unsecured business loan.

What types of asset finance can I apply for?

Depending on your needs, our panel of trusted lending partners could help you take out a range of different products, including:

Hire purchase — this allows you to pay for an asset in instalments over a set period, typically at a fixed interest rate, and own it at the end of the term. Your repayments will cover both the original cost of the asset and interest.

Finance lease — this allows you to lease a piece of equipment and use it over a period of time. Your finance provider will hold ownership of the asset, but you’ll receive exclusive use of it. Payments will cover the original cost of the asset and interest. At the end of the term, you can either renew your lease, or return the asset to the provider.

Asset refinance — this allows you to raise capital using your existing assets as security, meaning you can borrow a lump sum, then make monthly repayments over a fixed term to pay it back. Any assets you put up as security will need to be owned by the business outright.

What tax breaks can I get when financing new assets?

Thanks to capital allowance tax breaks, you could deduct the full cost of qualifying vehicles, machinery and equipment from your taxable profits, saving you up to 25% on the cost of your new asset.

Electric and emission-free vehicles are also eligible for 100% tax relief. Find out more.

Am I eligible for asset finance?

To be eligible to apply for asset finance through Funding Circle your business needs to:

• Be based in the UK
• Be a limited company or LLP
• Have at least 1 year of trading history
• Have an annual turnover of at least £50,000

How to apply for asset finance at Funding Circle

Through our panel of trusted advisors, you could get an asset finance deal of up to £5 million, with terms of between 1 and 7 years. We’ll do all the legwork for you, and talk you through your options until you find a deal that you’re happy with. 

When you apply for asset finance with us, we’ll also assess you for a term loan at the same time, saving you time and effort. If we believe one of our other products would be a better fit for you, we’ll let you know. 

Find out more about how we can help you get finance that works for your business.

20/08/24: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.