Asset Refinancing

Written by Jamie Moorcroft | Reviewed by Richard Wilcock | Updated: October 03, 2024

Table of contents

• What is asset refinancing?
• How much money can I get by refinancing company assets?
• How does asset refinancing work?
• Benefits of refinancing an asset
• Disadvantages of asset refinancing
• Does my business qualify for asset refinancing?
• Can I get asset refinancing with bad credit?
• How to apply for asset refinancing
• Longer-term Asset Refinancing
• Asset refinancing for digital assets
• How Capalona can help

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Asset-based refinancing allows you to borrow against both intangible and tangible company assets. Even if you still have part of your hire purchase to pay, you can still access a lump sum of working capital to reinvest in your business.

Use equipment, machinery, commercial vehicles, or software to secure your asset refinancing and receive funds in days.

What is asset refinancing?

Asset refinancing is a financial arrangement in which the borrower can unlock cash tied to company assets they already own. In this instance, the asset acts as collateral in a secured loan.

What if you almost own the asset? Let’s say you have a fleet of company vehicles on hire purchase, but the agreement is nearly finished, meaning you’ll soon own them outright. You can still apply for asset refinancing, as the lender can offer a loan based on the equity you’ve already accumulated.

How much money can I get by refinancing company assets?

Alternative funding providers offer refinancing arrangements from £1,000 to £10 million, depending on the asset's value. Whether you’re looking to boost your cash flow, purchase new stock, or refurbish your business premises, business asset refinancing provides a fast, flexible way to acquire the working capital you need to expand.

How does asset refinancing work?

Before the funding provider can release funds to you, they must value the asset you’re using as security. Each asset type is valued differently. For example, If you’re refinancing a vehicle, its age and mileage would be taken into consideration.

Once a value has been agreed, up to 100% could be released to you as cash within just days or, very likely, within twenty-four hours. You then repay the refinancing agreement at a pre-agreed rate and term in regular, fixed instalments.

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Benefits of refinancing an asset

Asset refinancing offers borrowers a simple, cost-effective way to secure additional working capital to reinvest in business operations.

Here are four more benefits of asset refinancing:

• Access capital. By unlocking funds from current assets, you can improve cash flow almost immediately.
• Structured payment plans. Most asset refinancing arrangements offer structured payment plans to help business owners budget effectively.
• There are no extra fees or charges. Interest rates and charges are agreed upon upfront, so you won’t incur any unforeseen costs during the loan's lifetime.

Disadvantages of asset refinancing

Asset refinancing can offer several advantages to businesses, however, it also comes with its share of disadvantages:

• Asset at risk. When you secure a loan with an asset, you put that asset at risk. This means that if you don’t make timely repayments, the lender can seize your asset.
• You transfer ownership. Another thing to bear in mind when refinancing an asset — although you might have owned the asset outright before your refinancing agreement, you won’t own it again until you make your loan repayments in full.
• Assets must be kept in good working condition. You must keep your asset in good condition throughout your refinancing agreement.

Does my business qualify for asset refinancing?

Lenders will need detailed information about the asset you’re choosing to refinance. Required information can include proof of ownership, current usage and any other relevant particulars — i.e. year of manufacture and the make and model if you’re refinancing equipment and vehicles.

Can I get asset refinancing with bad credit?

Lenders will accept applications whether you have good or bad credit. That’s because the funding is secured with the asset. This means if you default on your repayments the lender can seize your asset as collateral.

How to apply for asset refinancing

1. Applying for asset refinancing is quick and simple. First, you’ll want to assess your viable assets and understand which of them has the best equity to give you the most return when refinancing.
2. Next, compare asset refinancing providers to make sure you’re getting the best refinancing deal for your business needs.
3. Next, proceed with your application on the lender’s website. After the asset has been valued and terms agreed, it’s time to transfer ownership to the funding provider.
4. Depending on the lender, you will repay the loan in fixed instalments, monthly, quarterly or weekly.

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Longer-term Asset Refinancing

Most asset refinancing repayment terms are typically over a five-year period, but that doesn’t mean you can’t find asset refinancing lenders willing to extend the repayment period. If you own the asset outright, you can usually dictate payment terms more so than if you still owe money on the hire purchase agreement.

Having said that, if you’re looking for a long-term loan, there are other financing options available for UK SMEs, like secured loans with repayment terms of up to 10 years.

Asset refinancing for digital assets

The assets you put up as security to release equity don’t have to be tangible, such as commercial property, equipment, or vehicles. Instead, they can be digital assets, such as branding or software, as these carry high value, too.

So, if you don’t have physical assets, you can still apply for asset refinancing.

How Capalona can help

Our free loan comparison tool helps SME business owners like you, find and compare the best finance deals on the market. With so much choice online, it’s hard to decipher which funding provider suits your business needs perfectly.

Our tools let you compare providers next to each other — at a glance, view total repayable, interest rates and more. Get your asset refinancing quote now.

About the author

Written by Jamie Moorcroft

Money Writer, Director and Co-Founder

Jamie has over ten years of experience in the consumer and business finance industry, and with a background in graphic design, Jamie heads up the creative and design team at Capalona.

Updated: October 03, 2024
Published: September 29, 2017