Asset refinance: Release cash from equipment your company owns

Asset refinance releases cash from vehicles, plant or machinery your company already owns by selling them to a lender and financing them back. Your company keeps using the assets every day and repays the lender over a fixed term.

Behind the scenes, a typical refinance follows these stages:

1. Asset schedule. Your company lists each asset with make, model, year, serial or registration number, hours or mileage, and whether any finance is still owed.
2. Indicative terms. A lender gives an early view of how much it might advance, based on the schedule and your company's accounts.
3. Ownership checks. The lender checks purchase invoices and searches finance registers to confirm the assets are free of other finance, or how much is owed if they are not.
4. Valuation and inspection. For larger amounts, a valuer may inspect the assets and report on condition, age and the price they would fetch if sold.
5. Consent from other lenders. If a bank or another lender holds a debenture over your company, the refinance lender may ask it to confirm it has no claim on the specific assets being refinanced.
6. Completion. Your company signs a sale agreement and a new hire purchase or lease agreement. The lender settles any existing finance and pays the balance to your company's bank account.
7. Repayment. Fixed payments are made over the term. With sale and HP back, ownership returns to your company at the end.

Asset refinance suits assets that are easy to identify, move and resell. Lenders are much less keen on items that are fixed in place, highly customised or quick to lose value.

• Usually suitable: HGVs, vans and trailers, construction plant such as excavators, dumpers and telehandlers, forklifts, agricultural machinery, and well-known makes of manufacturing machinery such as CNC machines and presses.
• Sometimes suitable: printing and packaging lines, catering equipment and older machinery, often with a lower advance or shorter term.
• Rarely suitable: IT, software, shop fittings, building alterations and bespoke equipment that only works in one location.

Some lenders will also refinance an asset your company bought for cash in the recent past, treating it much like new asset finance. Ask early, as the cut-off date differs by lender.

Lenders base the advance on what they could realistically recover by selling the asset, which is often lower than what your company paid or what a dealer would charge for it. They then lend a proportion of that figure.

Valuers may report several figures, such as an open market value and a lower forced sale or auction value. Many lenders lend against the more cautious figure. Age, hours or mileage, condition, maintenance records, the strength of the used market for that make and model, and how easily the asset can be removed all affect the result. Keeping service records and original paperwork to hand can help.

The cost is the total of the finance charges and fees over the term, set against the cash your company actually receives. Look at the net amount released, after any existing finance is settled, as well as the total repayable.

• Finance charges: priced on the asset type and age, the term, the size of the advance against value and your company's credit profile.
• Valuation fee: for an inspection by an independent valuer, more common on larger deals.
• Documentation or arrangement fee: usually charged at the start.
• Option-to-purchase fee: at the end of sale and HP back.
• Settlement costs on existing finance: settling an older agreement early may involve its own charges.
• Tax effects: a capital allowances balancing charge may arise, so ask your accountant before going ahead.

Illustrative example only: actual costs depend on the lender and your circumstances.

A groundworks company owns plant that a valuer puts at £200,000. One machine still has £20,000 of finance outstanding.

• Lender advances 70% of the valuation: £200,000 × 70% = £140,000
• Existing finance settled by the lender: £20,000
• Cash paid to the company: £140,000 − £20,000 = £120,000
• Illustrative finance charges over 48 months: £28,000
• Total repayable: £140,000 + £28,000 = £168,000
• Monthly payment: £168,000 ÷ 48 = £3,500

Under sale and HP back, the company owns the plant again once the final payment and any option-to-purchase fee are made.

The amount depends mainly on the lender's valuation, the share of that value it is willing to advance and any finance already owed. Affordability matters too: the new payments must fit within your company's cash flow.

Lenders usually advance more against assets with a deep second-hand market and less against older or specialist kit. Many keep the term short enough that the amount owed falls faster than the asset's value. If your company's assets do not support the full amount it needs, the remainder may come from another source, such as invoice finance or a secured business loan.

Asset refinance turns assets your company owns outright into assets it must keep paying for, so be confident the cash is put to good use and the payments are affordable.

• Repossession: if payments are missed, the lender can recover the assets your company relies on to trade.
• Personal guarantees: lenders often ask directors to guarantee the agreement. Read our guide to personal guarantees.
• Existing lenders: check whether your bank's facility terms restrict selling or refinancing assets without consent.
• Early settlement: understand how the settlement figure is calculated if you want to repay early.
• Tax and VAT: the structure can affect capital allowances and VAT, so take accounting advice first.
• Purpose: refinancing to cover ongoing losses rather than a short-term need can store up problems.

Asset refinance usually suits companies with valuable, owned equipment that need a lump sum. Other options can be better depending on where the value sits in your business.

• Working capital finance: for companies without suitable assets, or needing smaller, shorter-term funds.
• Invoice finance: releases cash tied up in unpaid customer invoices and can grow with your sales.
• Business hire purchase: if the goal is buying new kit rather than releasing cash, financing the new asset directly is usually simpler.

Sometimes. Because the assets provide security, some lenders will look at companies with a past credit issue, a shorter trading history or thin recent profits, but each lender decides for itself and some will decline.

In those cases expect a lower advance against value, a shorter term or a director's guarantee. Lenders will want to understand why the cash is needed and see that the payments are affordable from bank statements. Each lender sets its own minimum trading period, from a few months to two or three years.

Asset refinance for limited companies, LLPs and partnerships of four or more partners is generally unregulated. Consumer Credit Act protections generally do not apply, so your rights come from the sale and finance agreements.

Read both documents in full and take legal or accounting advice where needed. Welcome Finance is not authorised or regulated by the FCA and arranges unregulated business finance only. Our guide to regulated and unregulated business finance explains what that means.

We are a commercial finance broker, not a lender. Your dedicated relationship manager, a real person you can reach by phone, email and chat, helps prepare your asset schedule and stays with you until the lender pays out.

1. Complete our 60-second eligibility check, which does not affect your credit score.
2. Your relationship manager reviews your asset list, ownership documents and any existing finance.
3. We approach suitable lenders on our panel. They run their own credit checks and valuations after you decide to apply.
4. We help you compare offers on net cash released, total repayable and terms.
5. Once documents are signed, the lender settles any existing finance and pays the balance to your company.

We charge no fee to your company. We are paid a commission by the lender when the finance completes, and you can ask how much it is. It can differ between lenders. See how we are paid.

Do I lose the use of my assets during refinance?

No. The assets stay with your company and keep working. Only legal ownership changes during the term.

Will a valuer need to visit?

For larger amounts or specialist kit, often yes. Smaller deals on common assets may be valued from the asset details and photographs.

What if I cannot find the original purchase invoices?

Some lenders accept other evidence, such as accounts showing the assets, registration documents or supplier records. Missing paperwork can slow a deal or reduce the advance.

Can several assets be refinanced together?

Yes. A group of assets is often refinanced on one agreement, which can spread the lender's risk across several items.

Can asset refinance fund a tax bill?

It can be used for many business purposes, including tax bills. You may also want to compare VAT loans or an HMRC Time to Pay arrangement.

How old can assets be?

There is no single rule. Lenders usually want the term to end before the asset reaches the end of its useful working life, so older assets often get shorter terms.

Does my bank need to agree?

If your bank holds a debenture, the refinance lender may ask it to confirm it has no claim over the assets being refinanced. Your relationship manager can explain what is needed.

Can I refinance the same assets again later?

Possibly, once enough has been repaid and the assets still hold value. Lenders will look at why repeated refinancing is needed.