What Is Asset Finance?
Asset finance lets UK businesses borrow to buy equipment, spreading cost over time while using the asset. Approval rates hit ~96%, with £23.5bn lent in 2023—yet only 24% of SMEs use it.
How Does Asset Finance Work?
With asset finance, a lender pays for the equipment you need. You repay the cost plus fees in regular monthly payments—typically over 2 to 5 years. Once you've finished paying, the asset is usually yours. That means you can invest in essential tools while preserving your cash flow.
Why Do Businesses Choose Asset Finance?
Asset finance is popular for several key reasons:
- Improved cash flow: No large upfront payment, so money stays available for daily costs.
- Budget certainty: Predictable monthly payments help businesses plan better.
- Instant use: Companies can use the new equipment immediately—and generate revenue—from day one.
In fact, over half (53%) of UK SMEs say they’re stuck with outdated equipment, and 70% believe leasing would help them grow.
What Can Be Funded with Asset Finance?
Asset finance can cover a wide range of items, such as:
- Vehicles: vans, trucks, company cars
- Construction machinery: excavators, cranes, heavy plant
- IT and office systems: computers, servers, furniture
- Specialist tools: medical scanners, manufacturing kit, lab equipment
New asset finance deals grew by 7% in 2023, reaching a record £23.5 billion, and continued rising into early 2025—car finance +17%, plant +8%, IT +5%.
Is Asset Finance Risky?
Asset finance is generally safer than unsecured loans because the equipment serves as collateral. If payments stop, the lender can repossess—but this rarely happens when businesses plan responsibly.
Plus, asset finance has up to a 96% approval rate—compared to only ~44% for traditional bank loans. The market continues to grow, hitting £23.5 billion in 2023—a third year of record growth.
Who Can Apply for Asset Finance?
Most UK businesses—even with limited trading history—can apply. Lenders look at income, asset value, credit, and repayment ability. Because it's secured lending, start-ups may also qualify more easily than with unsecured loans.
How Common Is Asset Finance vs Business Loans?
Despite accounting for 40% of new external business lending—around £21.9 billion in 2023—only 24% of UK SMEs actually use asset finance. That leaves 76% of SMEs missing out despite its benefits.
Asset Finance vs. Traditional Business Loans
Is Asset Finance Right for You?
It’s ideal if you:
- Need equipment now but lack upfront funds
- Want reliable, budgetable monthly payments
- Plan to use the equipment to generate income during repayment
Asset finance helps you upgrade without straining your finances or depleting your cash reserves.
Learn More About Asset Finance Options
If you want to explore now, visit our full guide here: Asset Finance Options
FAQs About Asset Finance
1. What is asset finance?
Asset finance is a way for businesses to access equipment or vehicles without paying the full cost upfront. Instead, you pay in monthly instalments while using the asset.
2. What types of assets can be financed?
Common assets include vehicles, machinery, IT systems, medical equipment, and office furniture. Both new and used items may be eligible.
3. Is asset finance suitable for startups?
Yes, many lenders offer asset finance to newer businesses, especially if the equipment being financed can generate revenue or support business operations.
4. How does asset finance differ from a business loan?
With asset finance, the equipment serves as security for the funding. Business loans are typically unsecured and may require personal guarantees or collateral.
