Asset finance or an unsecured loan for solar PV: which is better for my UK business?

Summary: For most UK businesses installing solar PV of around £10,000 or more, asset finance (hire purchase, chattel mortgage or lease) is often the most cost-effective choice because the panels and equipment secure the facility, giving lenders lower rates and longer terms. Unsecured business loans suit smaller installs, urgent needs or when you prefer not to put the equipment on the balance sheet — but they usually cost more and carry shorter terms. The right route depends on install size, ownership preference, credit profile and whether you need to combine grants or battery storage. Complete a quick enquiry to get tailored quotes and a free eligibility check: Get Quote Now — Free Eligibility Check.

Thinking of adding solar to your business premises? Choosing between asset finance and an unsecured loan affects cost, cashflow and ownership. This guide explains the pros, cons and which option typically suits different UK businesses.

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Quick answer — which is best for most businesses?

Short version:

• Asset finance is usually better for medium to large solar PV installations (typically £10k+). It gives lower monthly costs, longer terms and lenders prize the asset as security — so interest is often lower and you can spread the cost.
• Unsecured business loans are quicker and don’t tie the equipment to a security charge, which can be useful for small installs, urgent purchases or when you want full flexibility to sell or move the panels. Expect higher interest and shorter terms.

It depends on your priorities: lower cost (asset finance) vs balance sheet flexibility and speed (unsecured). If you’re unsure, get tailored quotes: Free Eligibility Check.

How asset finance works for solar PV (leasing, hire purchase, chattel mortgage)

Asset finance uses the equipment itself (solar panels, inverters, mounting systems, sometimes batteries) as security. Common structures include:

• Finance lease / operating lease — the funder retains ownership of the asset; you pay rentals to use it. This can keep the asset off your balance sheet depending on accounting and lease term.
• Hire Purchase (HP) — you acquire ownership after the final payment. The lender may retain a legal charge until the final payment is made.
• Chattel mortgage — you own the equipment from the outset while the lender takes a mortgage or charge against it.

Pros of asset finance:

• Typically lower interest rates because the asset reduces lender risk.
• Longer repayment terms — lower monthly cost and improved cashflow.
• Packages often include installation, warranties and maintenance options so quotes can be all‑in.
• Potential VAT and capital allowance considerations for VAT‑registered businesses (speak to your accountant).

Cons / things to watch:

• The asset is secured — repossession is possible if you default.
• There can be restrictions on sale, removal or modification of the system while finance is in place.
• Some lenders require a deposit or deferred payment depending on your credit profile.

Best for: larger installs (e.g. rooftop or ground‑mounted arrays costing £10k+), businesses that want lower monthly cost, want to spread payments over 5–10 years, or plan to own the system long term.

How unsecured loans work for solar PV

An unsecured business loan is not backed by the solar equipment or property — approval depends on business performance, cashflow and creditworthiness.

Pros of unsecured loans:

• No asset charge — you keep the freedom to sell or move the panels.
• Often faster decisions for smaller sums; paperwork is typically simpler than asset finance.
• Useful when funding a wider package (e.g. solar plus building works or battery top‑up) where asset finance is not appropriate.

Cons:

• Higher interest rates and usually shorter maximum terms than secured or asset finance.
• Lenders may cap the amount relative to turnover or require personal guarantees if the company credit profile is limited.
• Monthly payments are likely higher for the same capital amount.

Best for: smaller solar installs, businesses that have spare borrowing capacity and want speed and flexibility, or when you prefer not to have the equipment secured.

Other financing routes to consider

• Power Purchase Agreements (PPAs) or solar lease — a third party owns and installs the system; you buy the electricity. This can be zero‑capex but involves a long‑term contract.
• Green business loans & sustainability funds — some lenders and government/industry schemes offer preferential terms for energy efficiency projects; look for specialist sustainability business loans.
• Grants and local schemes — available from local authorities or government programmes from time to time — always check up-to-date guidance (Energy Saving Trust, gov.uk).
• Combined solutions — asset finance for the main array plus unsecured top‑up for batteries or EV chargers is a common structure.

For help understanding green funding options and eligibility, see specialist guidance on sustainability business loans and related offers on our industry page: sustainability business loans.

How lenders and brokers will assess your solar PV finance application

What lenders commonly check:

• Business age, turnover and recent accounts (often 1–3 years depending on lender).
• Bank statements (commonly 3–6 months) to verify cashflow.
• A detailed installation quote, equipment spec and installer accreditation (MCS or equivalent) and warranty information.
• Director credit history — personal guarantees may be requested for smaller or higher‑risk companies.
• VAT status and any existing finance covenants on the business or property.

Timing:

• Unsecured loans can deliver decisions in hours to a few days for small sums.
• Asset finance may take longer (valuation, security paperwork) — often days to a couple of weeks depending on complexity.

Practical tip: get the full installer quote and equipment spec before applying — it speeds approvals and produces more accurate quotes.

Costs and real-world comparison (illustrative examples)

Rates vary by lender, borrower profile and structure; below are illustrative comparisons (for guidance only):

Feature	Asset finance (secured)	Unsecured loan
Typical term	5–10 years	1–5 years
Typical cost	Lower APR than unsecured for similar credit	Higher APR due to no security
Decision speed	Slower — paperwork & security	Faster for smaller amounts
Balance sheet	Depends on structure — may be on or off balance sheet	No asset charge

Illustrative example: For a £50,000 array, asset finance over 7 years will usually produce a lower monthly payment than an unsecured loan for the same amount over 3 years. Exact costs depend on credit rating, deposit, loan term and lender — only tailored quotes provide precise figures. Get personalised options here: Free Eligibility Check.

Decision checklist — 8 quick questions to decide which fits your business

1. How large is the install (approx. £)? (Under £10k, unsecured may be simpler.)
2. Do you want to own the system immediately or defer ownership?
3. Do you have assets you’re willing to use as security?
4. How fast do you need funds — days, weeks or months?
5. Is lowest monthly cost or maximum flexibility more important?
6. Are you VAT‑registered and how will VAT affect the project?
7. Do you have existing borrowing covenants that limit secured lending?
8. Will you add battery storage or EV chargers now or later?

If you answered “large install”, “lower monthly cost” and “able to use the asset as security” — asset finance commonly fits best. If you need speed, flexibility or a small top‑up, unsecured could be preferable. Ready to compare tailored options? Get Quote Now.

How UK Business Loans helps

UK Business Loans is an introducer that connects businesses with lenders and brokers who specialise in business finance and sustainability projects. Our process is fast and free:

• Complete a short enquiry (takes around two minutes).
• We match you with selected lenders and brokers who understand solar PV finance.
• Those partners contact you with tailored, no‑obligation quotes.

Submitting an enquiry is not an application and does not affect your credit score. For a personalised comparison of asset finance vs unsecured loan options, start here: Start Your Enquiry — Free Eligibility Check.

Frequently asked questions

Will applying affect my credit score?

No — completing our enquiry form does not affect your credit score. Lenders may carry out credit checks later in the application process if you proceed with an individual provider.

Can I finance battery storage and EV chargers with solar finance?

Yes. Many lenders will finance combined sustainability packages (solar PV, batteries, EV chargers). Make this clear in your enquiry so you receive quotes that include all elements.

Do I need to be VAT registered for asset finance?

No, but VAT status affects how VAT is treated on purchase and on rental payments. Discuss VAT treatment with your accountant and the lender to ensure you understand cashflow implications.

What if my business has imperfect credit?

Specialist lenders and brokers work with applicants who have adverse credit, but expect higher rates or additional security/personal guarantees depending on circumstances. A broker can often find a better route than applying blind.

How long does the matching process take?

Once you submit an enquiry, a lender or broker typically contacts you within hours; formal quotes often arrive within a few days. Asset finance may take longer due to valuation and security paperwork.

Is UK Business Loans a lender?

No. We introduce businesses to lenders and brokers. We do not lend money or provide regulated financial advice; our service is free and designed to help you get matched quickly.

Next steps — get tailored quotes

Ready to compare real options? Complete our short enquiry and we’ll match you to lenders and brokers who can provide quotes tailored to your business and project size. It takes under two minutes and does not affect your credit score: Get Quote Now — Free Eligibility Check.

Important compliance note

UK Business Loans is an introducer — not a lender — and we do not provide regulated financial advice. We will share your enquiry with selected lenders and brokers who may contact you with offers. All finance offers are subject to lender terms and status. Always seek independent tax or accounting advice about VAT, capital allowances and accounting treatment for leased or purchased equipment.

1. Which is better for my UK business — asset finance or an unsecured loan for solar PV?
For most UK businesses with solar installs of around £10,000+, asset finance is usually the most cost‑effective option (lower rates and longer terms), while unsecured loans suit smaller, urgent or balance‑sheet‑sensitive projects.

2. How do asset finance options (hire purchase, chattel mortgage, lease) affect ownership and my balance sheet?
Hire purchase and chattel mortgage usually result in ownership (with the lender holding a charge until paid), while finance/operating leases often keep the asset off your balance sheet depending on accounting treatment and lease terms.

3. Can I finance battery storage and EV chargers alongside solar PV?
Yes — many lenders and brokers will include batteries, EV chargers and combined sustainability packages in a single finance facility, though you should specify this in your enquiry.

4. Will submitting an enquiry to UK Business Loans affect my credit score?
No — completing our enquiry form is not a credit application and does not affect your credit score, though individual lenders may carry out checks later if you proceed.

5. How quickly can I expect a decision or funds for solar PV finance?
Unsecured loans for smaller amounts can be decided in hours to days, while asset finance usually takes days to a couple of weeks due to valuation and security paperwork.

6. Do I need to be VAT registered to use asset finance for solar PV?
No, VAT registration is not required for asset finance, but VAT treatment affects cashflow and should be discussed with your accountant and the lender.

7. What documentation do lenders typically require for a solar PV finance application?
Lenders commonly ask for business accounts, recent bank statements, a detailed installer quote and equipment spec, installer accreditation (e.g. MCS) and director credit information.

8. Can I get solar finance if my business has imperfect or bad credit?
Yes — specialist lenders and brokers work with adverse credit profiles, although you should expect higher rates, potential personal guarantees or additional security.

9. What typical terms and costs should I expect for secured asset finance versus unsecured loans?
Asset finance typically offers longer terms (5–10 years) and lower APRs for similar credit, while unsecured loans usually have shorter terms (1–5 years) and higher interest due to lack of security.

10. Is UK Business Loans a lender and does using your service cost anything?
No — UK Business Loans is an introducer that connects you to trusted UK lenders and brokers, and our matching service is free and non‑obligatory.