What is asset finance — and how does it differ from a standard business loan?

Asset finance is a funding method where the asset you buy (vehicles, plant, machinery, IT, catering equipment) acts as security for the lender. Common types include hire purchase, finance lease, lease purchase and chattel mortgage. Repayments often mirror the asset’s useful life and, because the loan is asset-backed, rates can be more attractive than unsecured borrowing.

A standard business loan is typically a term loan or overdraft used for working capital, refurbishment, stock or expansion. It can be unsecured or secured against company assets. Term loans are often repaid over a fixed period with set monthly payments and can be used more flexibly than asset finance.

• When to use asset finance: to acquire expensive equipment while preserving cash and matching payments to asset life.
• When to use a business loan: to support payroll, stock purchases, premises work or other general business needs.

How combination finance typically works

There are three common ways businesses combine finance:

1. Separate facilities: one facility for asset finance and a separate business loan for working capital. Each has its own agreement and repayment schedule.
2. Blended or packaged deal via a broker:
3. Single-lender packages:

At a glance:

Is combining asset finance with a business loan allowed when applying through UK Business Loans?

Yes. UK Business Loans introduces your enquiry to suitable brokers and lenders who can structure combined or multi-facility finance. We act as an introducer to help you find partners that match your sector, company size and funding needs — we do not lend ourselves. Use our short enquiry to receive a free eligibility check and be connected with providers who can present combined options. Free Eligibility Check

Important: our enquiry is not an application. It’s a way to share basic information so we can match you with the best lenders or brokers. Any formal credit decision or regulated advice will come from the lender or broker you choose to progress with.

What lenders and brokers will consider when assessing a combined application

Underwriters review a range of factors when structuring combination finance:

• Trading history and recent financial performance (accounts and management accounts).
• Cashflow and affordability — lenders will look at DSCR or cashflow forecasts.
• Business and director credit history.
• Value, age and condition of assets to be financed.
• Amount of deposit or customer contribution required for asset finance.
• Existing charges on business assets and any intercreditor arrangements.
• Purpose of the loan and alignment of term to asset useful life.

Good brokers can combine lenders or negotiate packages so you get appropriate security structures, sensible repayment profiles and competitive pricing.

Typical benefits and downsides of combining asset finance with a business loan

Benefits

• Keeps working capital separate from asset repayments — improves cashflow visibility.
• Matches repayment term to asset life for efficient budgeting.
• Asset-backed finance often has lower interest than unsecured loans.
• Possible tax and VAT benefits depending on product — check with your accountant.

Downsides / risks

• Multiple repayments and relationships to manage.
• Complex security arrangements (fixed charges, cross-default clauses) can limit flexibility.
• Potential fees (arrangement, documentation, early repayment) if not structured carefully.

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Example scenarios

Realistic examples where combination finance works well:

Construction contractor

Asset finance for excavators on hire purchase (3–5 years) + term loan for materials and labour (12–24 months). Keeps asset repayments predictable while the loan covers short-term working capital.

Restaurant fit-out

Lease or hire purchase for kitchen equipment + business loan for pre-opening costs and initial stock. Asset finance preserves cash and aligns repayments with the equipment’s lifespan.

Logistics operator

Vehicle finance for vans (finance lease) + overdraft or short-term loan for fuel, drivers and route expansion. The lender may take security over financed vehicles while the loan is secured differently or unsecured, depending on the deal.

How UK Business Loans helps you combine finance

1. Complete a short enquiry (takes under 2 minutes).
2. We match your request to 1–3 relevant brokers or lenders with sector experience.
3. Brokers review documents and propose a structure (single lender or split facilities).
4. Compare offers and choose the best fit — no obligation to proceed.

Our service is free for businesses. To start, complete a simple form and we’ll connect you quickly. Start your Free Eligibility Check

Documents & information to have ready

Having these ready speeds up the process and helps brokers deliver accurate proposals:

• Company accounts (last 1–3 years) or up-to-date management accounts.
• Business bank statements (3–6 months).
• Details of the assets to be financed: make, model, age, cost, and VAT status.
• Cashflow forecast or business plan for expansion projects.
• Director details and ID where requested by lenders.

Costs, repayments and what to watch out for

Typical cost elements:

• Interest rates (asset finance rates are often lower than unsecured loan rates).
• Arrangement, documentation and valuation fees.
• Early repayment charges or deferred payment structures.
• Residual values or balloon payments on some asset products.
• VAT treatment differs by product — a hire purchase vs lease can have different VAT impacts.

Watch outs: cross-default clauses, personal guarantees, and charges that limit future borrowing. Consider legal or accounting advice before signing commercial finance agreements.

FAQs

Can one lender provide both asset finance and a business loan?

Yes. Some lenders offer both products and can package them together; otherwise a broker may combine offers from multiple lenders to meet your needs.

Will combining finance affect my credit score?

Submitting an enquiry via UK Business Loans does not affect your credit score. Lenders/brokers may carry out credit checks once you progress to a formal application.

Do I need to use the same lender for both types?

No — using different lenders is common. A broker can coordinate multi‑lender packages if a single provider can’t meet every requirement.

How long does it take to get a combined offer?

Simple packages can often be quoted within 24–72 hours after document submission. Complex deals or multi-lender structures may take longer.

Can businesses with limited trading history combine finance?

Some lenders and specialist brokers work with newer businesses, but options depend on trading history, asset type and the availability of suitable security or forecasts.

Is VAT added to asset finance repayments?

VAT handling depends on the product. For hire purchase you generally pay VAT upfront; leases may include VAT in regular payments. Ask your broker and accountant for details.

Get Started — Free Eligibility Check

Ready to see your options?

If you’re planning to buy equipment or need working capital, combining asset finance with a standard business loan could give you the cashflow flexibility and matched repayment terms you need. Complete our short enquiry and we’ll connect you to brokers and lenders tailored to your sector and funding amount (we typically handle enquiries from around £10,000 upwards).

Start your free, no‑obligation quotation: Get Quote Now

UK Business Loans acts as an introducer to brokers and lenders — we do not lend money or provide regulated financial advice. Submitting an enquiry will not affect your credit score; lenders or brokers may perform checks if you proceed with an application. All offers are subject to lender criteria.