Asset finance
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What is asset finance?
Asset finance allows your business to acquire the vehicles, equipment or specialist tools it needs without paying the full costs upfront. Instead of using valuable working capital in one large payment, the cost is spread over an agreed term. That keeps cash in the business while still allowing you to move forward.
For many companies, growth depends on having the right assets in place at the right time. That might mean adding vans to a fleet, upgrading machinery, investing in kitchen equipment for a new restaurant, or completing a full shop or office fit out.
Asset finance allows your business to acquire the vehicles, equipment or specialist tools it needs without paying the full costs upfront. Instead of using valuable working capital in one large payment, the cost is spread over an agreed term. That keeps cash in the business while still allowing you to move forward.
For many companies, growth depends on having the right assets in place at the right time. That might mean adding vans to a fleet, upgrading machinery, investing in kitchen equipment for a new restaurant, or completing a full shop or office fit out.
What can be financed?
Asset finance covers a wide range of business purchases. In simple terms, if it is a tangible business asset, it can usually be financed.
- Our services include:
- Cars, vans, trucks and trailers, essentially anything with wheels
- Plant and machinery for manufacturing or construction sectors
- Restaurant, shop or office fit outs, including furniture, equipment, decor, computers, tills, ovens or kitchen equipment, and more
- Specialist tools and commercial equipment
If you are unsure whether your asset qualifies, a quick conversation can usually confirm your options.
WHY do businesses use asset finance?
There are several practical reasons businesses choose asset finance. Asset finance protects working capital. Instead of investing in a large lump sum, you spread the cost into manageable monthly payments.
This allows you to scale at the right time. If demand increases or contracts are secured, you can invest in the tools or vehicles you need immediately. Asset finance can also help you with VAT planning. Sometimes financing an asset simply makes better financial sense than paying in full, especially when the asset will depreciate over time.
WHAT TYPES OF asset finance is available?
There are three main types of asset finance commonly used by businesses.
HIRE PURCHASE
It works just like a straight purchase, only spread over time. You pay an initial deposit (if required) followed by fixed monthly instalments. The log book can be retained by you from the start, but the lender holds legal ownership until the agreement is fully settled. At the end, once a small ‘option to purchase fee’ is paid, ownership transfers fully into your business. This option suits businesses that want to eventually gain ownership of the asset.
Finance lease
Allows you to use the asset without paying VAT upfront on the full purchase price. Instead, VAT is spread across the monthly rental. The lender retains the rights to ownership throughout the agreement. At the end of the term, or if you choose to settle early, the asset is typically sold to a VAT-registered third party. This option can improve cashflow by spreading VAT costs and is often used by VAT registered businesses.
Operating lease
An operating lease works similarly to a personal lease arrangement. Monthly payments are typically lower because you are paying for use rather than ownership. VAT is spread across the term. At the end of the agreement, the asset is returned to the dealership or lender, depending on the structure agreed. This can suit businesses that prefer to upgrade vehicles or equipment regularly without owning them long-term. The right structure depends on your business goals, tax position and long-term plans.
What do lenders
TYPICALLY LOOK FOR?
Lenders will assess your trading history, financial performance, affordability and credit profile. Deposit requirements can vary depending on the asset and the strength of the application.
Start-ups can be considered, particularly where there is a strong proposal and director support. The key to a successful commercial finance offer, is presenting it correctly and matching it to the right lender from the start.
Why Meridan Finance?
Asset finance is all about finding the right lender and choosing the most suitable structure.
When you work with Meridan Finance, you access expertise that understands the lender’s criteria, and we’re a partner who works hard to maintain strong relationships. We will always aim to place your application where it has the strongest chance of approval. If you’re considering purchasing vehicles, equipment or completing a commercial fit out, and you’d like to explore whether asset finance could make it more manageable give us a call today.