Can you combine unsecured working capital with asset finance for a single green project?

UK Business Loans — Connecting UK businesses to lenders & brokers. Last updated: 2025-11-01

Short answer: Yes — in many cases you can combine unsecured working capital with asset finance for a single sustainability (green) project, but feasibility depends on lender appetite, how costs are split between equipment and soft costs, the value of the asset, and your company’s credit and cashflow. Below we explain the common structures, pros and cons, typical costs, documentation you’ll need and practical next steps so you can arrange a blended package that suits your project.

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Table of contents

• Quick answer (TL;DR)
• What the two finance types are
• Can you combine them?
• When combining is likely to be approved
• Typical costs, terms and tax considerations
• Practical steps to structure a combined finance package
• Who can help
• Short case studies
• FAQs
• How UK Business Loans helps
• Final checklist & next steps

Quick answer (TL;DR)

Yes — typically in two ways:

• Two separate facilities: an unsecured working capital loan for soft costs and an asset finance facility (secured against the equipment) for the hardware.
• A packaged/blended facility from one provider combining a secured asset tranche and an unsecured working capital tranche.

Feasibility is affected by: credit profile, asset loan‑to‑value (LTV), clear split of project costs (fundable asset vs soft costs), evidence of savings or revenues, and whether grants are in place.

What the two finance types are

What is unsecured working capital?

Unsecured working capital is borrowing without specific asset security. Typical uses for a green project include paying contractor mobilisation, labour, VAT, project management, or bridging timing gaps while grants or incentives are confirmed. Product types include unsecured business loans, short-term loans and merchant cash advances. Unsecured borrowing is commonly more expensive than secured borrowing because lenders take higher risk.

What is asset finance?

Asset finance provides funding to acquire equipment and is secured against the asset itself. Common forms are hire purchase, finance leases and asset refinancing. For sustainability projects this covers solar PV arrays, inverters, battery storage, EV chargers, heat pumps and other plant — lenders price and term to the expected useful life of the equipment.

Why sustainability finance can differ

“Sustainability loans” or green finance packages may factor in energy savings, contractor warranties and access to grants. Some specialist lenders price green assets more competitively because of predictable life spans or operational savings; others will still assess like any commercial asset.

Can you combine unsecured working capital with asset finance?

Yes — but how you combine them matters. Three common approaches:

1) Separate facilities (most common)

• Asset finance covers equipment purchase/installation quoted as capital cost.
• An unsecured working capital loan covers soft costs: design, planning, VAT, mobilisation and contingency.
• Pros: each facility is matched to its purpose; faster approvals for specialist asset lenders. Cons: more paperwork and potentially separate repayments.

2) Blended / packaged facility (single lender)

Some lenders or brokers can package a secured asset tranche alongside an unsecured tranche (or overdraft). This provides a single application, single relationship and potentially coordinated drawdowns. Fewer lenders offer this; if available it can simplify admin but may come with more covenants or cross‑security.

3) Multi-lender hybrid

Asset finance from a specialist lessor while working capital comes from invoice finance, overdraft, or a challenger bank — lenders coordinate but remain separate. This can produce efficient pricing if each lender is best-in-class for their tranche.

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When combining is likely to be approved

Lenders approve blended finance where the project and borrower reduce perceived risk. Helpful factors:

• Clear, itemised project budget splitting asset costs from soft costs.
• Firm supplier quotes and installer credentials (brands, warranties).
• Reasonable cashflow forecasts showing how savings or revenue cover repayments.
• Strong company accounts and positive trading history (or demonstrable contract revenue).
• Valuable, re-saleable assets (EV chargers, commercial-quality solar, batteries).
• Evidence of grants, tax incentives or third‑party contracts that reduce take-on risk.

Less likely: speculative projects, assets with little resale or unproven technology without warranty or maintenance agreements.

Typical costs, terms and tax considerations

• Terms: working capital 6 months–5 years; asset finance typically 2–7+ years depending on asset life.
• Rates: unsecured facilities are usually higher priced than asset-secured finance. Exact rates vary by lender and profile — all figures are indicative only and subject to lender assessment.
• VAT & tax: VAT timing (whether VAT is refundable or needs funding) often drives the need for working capital. Certain green assets may qualify for capital allowances or Enhanced Capital Allowances — consult your accountant.
• Grants: grants or government schemes can materially reduce borrowing needs; make sure lenders know if grant funding is expected and its timing.

Practical steps to structure a combined finance package

Follow this checklist to maximize approval chances:

1. Define scope and split costs into fundable assets (hardware) and soft costs (labour, VAT, contingency).
2. Obtain supplier quotes, equipment spec sheets and installation timelines.
3. Prepare 12–36 month cashflow projections showing cost savings or revenue from the asset (energy savings, charging income, etc.).
4. Gather company documents: latest accounts, bank statements, VAT returns and management accounts.
5. Decide preferred structure: two facilities, blended package or hybrid. Ask potential lenders about staged drawdowns and mobilisation funding.
6. Understand security: asset charge, fixed & floating charges, personal guarantees and cross-collateralisation.
7. Review repayment terms, early settlement fees and whether balloon payments or residuals apply.

Recommended documents to have ready:

• Supplier quotes and purchase orders
• Installation and maintenance agreements
• Business bank statements (3–6 months)
• Accounts (last 2–3 years) or management accounts
• Cashflow forecast and project plan

Who can help / types of lenders

Depending on your project you’ll consider:

• High‑street and challenger banks (larger projects)
• Specialist asset finance providers (equipment-focused)
• Invoice finance or overdraft providers (working capital)
• Commercial brokers who can package multi-tranche deals
• Green finance specialists experienced in sustainability projects

UK Business Loans can match you quickly to lenders and brokers who regularly finance sustainability projects of £10,000 and upwards. If you’d like a tailored match, start with a Free Eligibility Check.

Short case studies

Example 1 — Rooftop solar for a manufacturing unit

Asset finance funded the PV panels and inverters (5‑year term). An unsecured short-term loan covered VAT and installer mobilisation costs. The split allowed the business to keep working capital, benefit from lower asset finance rates, and complete the project without cashflow strain.

Example 2 — EV charger rollout for a retail chain

A single lender offered a blended package: secured asset tranche for chargers and an unsecured tranche for civil works and commissioning. One application reduced admin and delivered staged drawdowns aligned to installation milestones.

Frequently asked questions

Can unsecured working capital and asset finance be combined for one green project?

Yes — commonly via separate facilities or a blended package. The right route depends on asset value, lender appetite and your cashflow.

Will applying affect my credit score?

Submitting a quick enquiry with UK Business Loans does not affect your credit score. Lenders may carry out credit checks later in the formal application process.

Which is cheaper: unsecured working capital or asset finance?

Asset-secured finance is usually cheaper because the asset provides security. Unsecured working capital is typically more expensive due to higher lender risk.

Can grants reduce the finance I need?

Yes. Confirmed grants reduce borrowing need and improve affordability — make sure lenders see evidence of awarded grants or confirmed applications.

How quickly can I get funding?

Eligibility responses can be quick (hours to days). Full approvals and drawdowns depend on documentation and security and may take days to several weeks.

What security will lenders usually ask for?

For asset finance: fixed charge over equipment. For unsecured working capital: typically no fixed asset charge, but lenders may request personal guarantees or a company charge for larger amounts.

How UK Business Loans helps

We’ll match your enquiry to lenders and brokers who specialise in sustainability and asset finance and who understand how to combine tranches. Our service is free and there’s no obligation.

• Complete a short enquiry form — it takes around 2 minutes.
• We match you to suitable partners and forward your details.
• Partners contact you with quotes and options; you choose the best fit.

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Final checklist & next steps

• Split your project budget into asset vs soft costs.
• Collect supplier quotes, warranties and installer credentials.
• Prepare simple cashflow and savings forecasts.
• Complete our short enquiry to get matched quickly.

Need more detail about how sustainability projects are funded? Read more about our sustainability loans and how they’re structured: sustainability loans.

1. Can I combine unsecured working capital with asset finance for a single green project?
Yes — many businesses combine an unsecured working capital tranche (soft costs) with asset-secured finance (equipment) via separate facilities, a blended package or a multi‑lender hybrid depending on asset value, LTV, credit and lender appetite.

2. What types of finance suit sustainability projects like solar, batteries or EV chargers?
Typical options are asset finance (hire purchase, finance lease) for hardware and unsecured business loans, overdrafts or invoice finance for mobilisation, VAT and other soft costs.

3. How much does it cost to blend unsecured working capital with asset finance?
Costs vary by lender and profile, but unsecured working capital is usually more expensive than asset‑secured finance, with working capital terms typically 6 months–5 years and asset finance 2–7+ years tied to asset life.

4. Will submitting an enquiry with UK Business Loans affect my credit score?
No — completing our free enquiry to be matched with lenders does not affect your credit score, though individual lenders may carry out checks if you proceed with formal applications.

5. What paperwork do lenders usually require for a combined sustainability loan package?
Lenders commonly request itemised supplier quotes, equipment specs and warranties, installation agreements, company accounts, bank statements, VAT returns and cashflow forecasts.

6. How quickly can I be matched to lenders and receive funding for a green project?
You can be matched to suitable brokers or lenders often within hours, while full approvals and drawdowns for packaged finance typically take days to several weeks depending on documentation and security.

7. Can grants, tax reliefs or capital allowances reduce the amount I need to borrow?
Yes — confirmed grants and available capital allowances or tax reliefs reduce borrowing needs and improve affordability, so provide evidence of any awards or applications to lenders.

8. What security will lenders ask for when combining asset finance and unsecured loans?
Asset finance usually takes a fixed charge over the equipment, while unsecured tranches may still require personal guarantees, company charges or cross‑collateralisation for larger amounts.

9. Can start‑ups or businesses with imperfect credit access combined sustainability finance?
Some specialist lenders and brokers in our network do consider start‑ups and businesses with weaker credit histories, though expect stricter terms, higher rates or additional security requirements.

10. How should I structure my project budget to improve approval chances for blended finance?
Split costs clearly into fundable capital (hardware) and soft costs, obtain firm supplier quotes and installation timelines, and prepare 12–36 month cashflow forecasts showing expected savings or revenue.