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Finance to purchase new and used machinery, vehicles and equipment.

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What is asset finance

Asset finance is a kind of lending that gives you access to business assets such as machinery, vehicles and equipment or enables you to release cash from the value in assets you already own.

Asset finance and leasing works by enabling your business to thrive and grow without compromising cash flow by allowing you to invest in the equipment and vehicles you need now without any major outlay.


what is asset finance

What is Asset Finance

Asset finance is a form of lending that allows you to use assets such as equipment, machinery, and vehicles without purchasing them at first. It can also help you release cash from the value in assets you already own or apply your existing assets as collateral for a business loan from an asset lender.

Asset finance leasing is typically attractive to businesses who:

  • have little capital available to invest in new assets, but want to put their growth plans into action
  • have significant assets they would like to use for an agreed period
  • would prefer to spread high costs over a longer time and are looking for a fixed monthly payment.

An asset finance loan can also be used as a form of funding where businesses cannot secure finance through the traditional banking sector.

Short-term asset financing leasing also makes it easier for organizations to stay competitive by providing access to the most up-to-date technology. Asset finance is a wide description that relates to high-priced assets in your business.

Generally, there are two types of asset finance – asset finance to purchase additional assets and secured lending against existing assets.

Businesses can use asset finance for any equipment or machinery that they need to run their business. Still, it’s especially useful if what you’re looking to buy is expensive.

What is an asset?

An asset can be defined as a valuable resource that has been acquired to generate returns. Assets are often tangible, but they don’t have to be – what makes something an asset is its ability to add value or generate income somehow.

Many different types of assets can be financed using asset finance, including:

  • Business vehicles
  • Renewable energy equipment (including LED lighting)
  • IT, software and technology
  • Plant and machinery
  • Agricultural and tractor finance

How does asset finance work?

Asset finance is a highly attractive way to fund what you need for your business. It’s an alternative form of borrowing that means instead of purchasing what you’re looking for, you rent it from the funder until the end of the agreed leasing period.

When applying for asset finance, lenders will occasionally require what’s known as a ‘security’ or guarantee. This can either be through the assets that you already have, usually property or some other valuable asset of yours that has value.

The asset essentially pays for itself over the lease term, usually between 3 and 5 years. The chosen funder pays the supplier on your behalf and the cost is spread over the agreed term.

Types of asset finance


It can be expensive and risky to pay cash upfront for brand new machinery or equipment, and some businesses don’t have the working capital for a big purchase. That’s where equipment asset finance comes in.Our asset finance options are:


Hire purchase

Hire purchase works by letting you spread the expense of buying an asset over an agreed amount of time in instalments. Then, once you’ve repaid the funder in full, the equipment is yours.

Rather than leasing an asset, a hire purchase is like making a purchase and paying in instalments, as a private customer might do for a car. Usually, a 10% deposit and all the VAT is paid upfront. You’ll be responsible for insurance and maintenance, but you own the asset in full at the end of the term.


Looking for finance?

We will discuss all finance options with you and help you choose the right asset finance solution for your specific business.

Operating lease

An operating lease is an equipment lease where you rent an asset for a fraction of its serviceable life. An operating lease is also known as a business contract hire, especially if it links to commercial vehicles.

Operating leases are the most simplistic kind of asset finance leasing in that you don’t take on the risk or reward of owning the asset (like insurance and maintenance costs). An operating lease is a means of leasing an asset for your business over a short or medium period and is more flexible than finance leases or hire purchases.

An operating lease is essentially a rental lease with a set duration, and the lessor will usually handle maintenance. And can be cheaper because you don’t pay for the total value of the asset.


Looking for finance?

We will discuss all finance options with you and help you choose the right asset finance solution for your specific business.

Finance lease

A finance lease is a variety of equipment lease where you rent an asset for most of its serviceable lifetime. Finance leases are also identified as capital leases.

A finance lease is a longer-term lease designed for most of the equipment’s life. You get full use of the asset and pay for the total value over time but don’t technically own it, which means it’s possible to offset rental costs against profit and claim VAT — which could be tax-efficient depending on your situation.

One crucial characteristic of finance leases is that you take on most of the risk and reward of purchase (maintenance costs and changes in value) but never own the asset. As a result, a finance lease looks and feels like a hire purchase, but they show differently on the balance sheet.

Finance leases consist of an initial rental period, where the monthly instalments total the full cost of the asset plus interest.

When the initial period is up, the asset will typically be near the end of its useful life, and you will generally have three options:

  • Continue to manage it in a secondary lease term (usually with more modest payments).
  • Sell it and keep a share of the revenue from the sale.
  • Return it to the lessor.

Choosing between a finance lease and hire purchase for many businesses comes down to financials and accounting. For example, do you want to pay the VAT upfront or spread the cost over the monthly payment? Some businesses choose hire purchase because the asset shows on their balance sheet, and others prefer to show it as an operating cost and offset rentals against profit.


Looking for finance?

We will discuss all finance options with you and help you choose the right asset finance solution for your specific business.

Asset refinancing

Asset refinancing is the method of acquiring a loan against valuable items that your business owns, like buildings, vehicles or equipment. Depending on the context, it could refer to using an asset as a loan or as security, asset finance combined with other finance or debt consolidation.

You can refinance both assets that are already on finance and existing unencumbered ones and release capital back into your business for other projects or improving finance terms. If the business can’t keep up with repayments, the funder takes the asset to recover what’s owed. Therefore refinancing tends to only apply to “harder assets” like vehicles, machinery and plants and the amount you can acquire depends on the value of the asset involved. e.g. you couldn’t borrow £50,000 secured against an asset worth £30,000.


Looking for finance?

We will discuss all finance options with you and help you choose the right asset finance solution for your specific business.

Invoice financing

Invoice financing is a form of borrowing based on your customers’ outstanding obligations to your company.

It works by using unpaid invoices to represent money that will be paid to you, cutting out the delay associated with typical payment arrangements. For example, it might be 14 days to 90 days or more before you get paid, depending on the length of your loan. Invoice finance allows you to receive most of your money immediately, so you won’t have to wait for it.

The idea behind invoice financing is basic: rather than waiting days or weeks for your invoices to be paid, lenders advance you the majority of the money right away. As a result, you receive payment sooner for finished work, allowing you to focus on running your business.
If your company makes recurring invoices for services, you might be qualified for invoice financing.

Invoice financing is one of the best methods to alleviate cash flow issues and get paid faster for completed work. Invoice financing is an excellent method to ensure your business’s financial health and cash flow without being held back by your finances.


Looking for finance?

We will discuss all finance options with you and help you choose the right asset finance solution for your specific business.

What is asset-based finance?

Some asset finance companies specialise in one sector of asset refinancing, while others may refinance anything with a resale value. Thus, there are a variety of asset financing agreements to choose from, and it may be a very flexible arrangement.

However, there are a few provisos: the asset must usually be essential to your business, and it must also be removable so that it may serve as collateral for the loan.

Net Zero Funding is an asset finance provider offering a range of flexible funding options which let you purchase assets and grow your business while keeping hold of working capital.
Asset finance options can be used for both new and second-hand assets, or as a way of releasing value from those assets you already own.

Over the past five years, asset leasing has become the fastest growing finance choice for businesses of all sizes, across all sectors.



Looking for asset finance?

We will discuss all finance options with you and help you choose the best finance solution for your specific project.


Asset finance benefits

Costs are lower at the start: Asset financing helps you save money on the upfront purchase of an asset. The funder buys the asset for you before leasing it to you.

No depreciation: Some assets can depreciate over the short term, which reduces their value. Asset finance lessens this risk because the business doesn’t bear the brunt of the loss in value. 

More working capital: By spreading the cost of an asset, you may use spare cash for other expansion initiatives or set it aside for security while still getting access to the equipment your organisation requires to compete and advance.

Fewer costs: In many asset finance agreements, the funder takes care of the maintenance and management of the asset, so you’re protected from costs associated with making sure the purchase is working well. 

No or little additional security is needed: In many cases, the asset itself is deemed a suitable guarantee for the loan, but occasionally a deposit is needed. Asset finance helps businesses that are unable to access more common forms of business finance. 

Better cash flow: In most asset finance agreements, you make regular set payments over the lease term, which means your cash flow and amount of working capital could improve. Fixed interest rates are usually agreed to make repayments more predictable.

Asset financing FAQs

How long does the application process take?

It varies depending on the size and complexity of your application. We generally aim to have the finance agreed within 2 days.

Who is eligible for an asset finance loan?

Net Zero Funding can help any business in the UK wanting to purchase or refinance new or secondhand equipment, provided that they are a limited company, PLC or LLP. We cannot help sole traders.

Why use Net Zero Funding?

There are more than 60 asset finance companies in the market, and each has their own rates, credit policies and application processes.

We help you explain your business and consumer benefits to funders or investors to de-risk their investments. Our unique industry background means we can ‘uncomplicate’ complicated projects and identify the most appropriate funder for your specific project at the best rates available. We’ll manage the application for you to completion, which saves you valuable time and money. Oh, and we get paid by the funders, so you don’t pay us anything for our service.

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It's quick and free! Just fill in the form with some basic information about your business and and how much you need. We'll be in touch within 24 hours (Monday-Friday).