Borrowing against something you own or plan to buy (assets)

Last updated: 29 March 2017

If your business is looking for money, you can borrow against the value of things you own or things you plan to buy.

Things you own or plan to buy are known as 'assets'. Borrowing against them in this way is called 'asset finance'.

Asset finance is a type of 'asset-based lending' and means you:

  • can borrow money for things like equipment or vehicles
  • can spread the cost of buying things over time
  • don't need a large turnover

Using asset finance

Asset finance is mainly for businesses that own:

  • vehicles
  • equipment and machinery
  • property
  • unpaid invoices

The lender uses these assets as 'security'.

'Security' is an asset that you can offer the bank as a safety net for them, if you can't repay the money they've lent you.

If your only asset is your unpaid invoices, you might consider using your invoices to raise cash (invoice finance) instead.

If you don't have any assets, you might want to consider other ways of funding your business, such as:

How much you can borrow

The amount you can borrow will depend on:

  • the value of the asset
  • the type of asset
  • your ability to repay
  • what the lender is willing to lend you

Before lending you any money a lender will want to see your business plan.

Lenders will charge you interest and a fee.

Assets you plan to buy

As well as borrowing money against assets you already own, you can get asset finance for things you plan to buy. The lender will use what you buy as security.

You can normally buy a wide range of things using this type of asset finance, for example:

  • plants and equipment
  • vehicles
  • computer hardware and software
  • office equipment

Choosing a lender

Asset finance is provided by banks and specialised lenders. It's worth checking with your bank first to see if they can offer your business asset finance.

When choosing a lender you should:

  • check they are reputable
  • find out what interest and fees they charge
  • compare quotes from different lenders

Further help

You can use these websites to search for lenders:

Better Business Finance
Asset Based Finance Association