The different types of asset finance

There are various types of asset finance, each suited to businesses in different situations. Learn about which asset finance is right for your business here.

The different types of asset finance | Shire Business Group

Author Name: Shire Business Group

No matter what sector you operate in, asset finance is a great way for businesses around the world to ensure functional cash flow. Every business owns/needs assets, and every business requires liquid funds, so it stands to reason that proper management of these two components is essential to maintain smooth operations.

It can be difficult to know exactly what type of asset finance that you require. That’s why we’ve put together this article covering the varieties of asset finance you might consider, the benefits of each and how you can improve your cash flow through the use of financing.

“At Shire Business Group, we work closely with businesses of all sizes, ensuring that they have access to flexible asset finance options.“

What is asset finance?

Regardless of the size of your business, it’s likely that you own significant physical assets, anything from machinery to printers, air conditioning to telephone systems is considered an asset. Asset finance is a type of business finance that provides the opportunity to free up cash flow, spread the cost of expensive assets and enjoy tax benefits. This is key when looking for working capital to spread across your business.

Hire purchase

Great for those who require cars or other expensive equipment, but do not want to/cannot afford to buy outright, hire purchase asset finance allows your business access to the equipment that you need immediately, while spreading the cost over time. Fixed terms are usually between one and six years, and at the end of this period, you’ll have the option to pay a purchase fee to gain full ownership of the asset.

Who is hire purchasing good for?

  • Hire purchase is more common in industries that rely on expensive equipment, such as construction, manufacturing, plant hire, printing, road freight, transport, engineering and professional services
  • It’s ideal if your business doesn’t have the up-front capital
  • Payments have a fixed interest rate, allowing for easier budgeting over time, which can provide distinct tax advantages 

Equipment leasing

An alternative to hire purchase, equipment leasing is perfect for businesses that require assets for a short period, or for those that don’t want to own the asset themselves. At the end of the agreement, you have a few options. You can either:

  • Upgrade your asset to the latest specification and begin a new lease
  • Return it if your use case for the asset has passed

This is the most flexible type of asset finance, as it requires less capital up-front and provides you immediate access to the required equipment.

What businesses benefit from equipment leasing?

Leasing is becoming increasingly popular as businesses see the benefits over ownership. As a result of leasing’s inherent flexibility, it’s a superb option for businesses of all types. Whether you’re looking for hard assets such as plant machinery, or soft assets like IT software, equipment leasing is a great way to gain access to the items that you need as and when you need them.

Throughout the pandemic, the importance of leasing has become even more apparent as budgets have become tighter and futures more uncertain. 

Asset refinancing

Refinancing is a unique option available to businesses who have assets but need to unlock valuable cash. To refinance, a business sells their asset to a finance company and then hires it back over an agreed period. By refinancing their assets, businesses can:

  • Gain immediate access to large amounts of cash
  • Avoid workflow interruption as businesses can continue using the asset throughout
  • Use cash to reinvest into various aspects of the business, or purchase other required assets

Will asset refinancing work for my business?

If you’re looking to expand, you want more capital to reinvest, or you’re going through a tough time (perhaps your business is seasonal), then refinancing can be a brilliant option. It’s a great way to gain an influx of cash, all while maximising efficiencies as there’s no impact on your procedures as the assets remain with you. Another possible benefit of refinancing is that your business may enjoy tax breaks.

Asset finance support with Shire Business Group 

At Shire Business Group, we work closely with businesses of all sizes, ensuring that they have access to flexible asset finance options. Our bespoke repayment programmes and fixed interest rates allow you to spread repayments in a way that suits your cash flow, be that consistently across the year, or seasonally to suit your financial situation. Whether you’re looking to finance anything from large-scale machinery to smaller-scale computer systems, we have the expertise to support you.

To find out more, get in touch with us today. Our specialists are on hand to discuss how we can help you find the right asset finance solution for your business.

Finance is for business use customers only. All finance is subject to credit status, approval and terms and conditions.

Finance for business use customers only. All finance is subject to credit status, approval, terms and conditions.

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Leasing from Shire Group. Business Funding & Business Finance Specialists.