Can I secure asset refinancing on existing hotel equipment to release working capital?

Short answer: Yes — in most cases you can refinance existing hotel equipment to release working capital. Common methods include sale & leaseback, asset-backed refinance, chattel mortgages and hire-purchase refinancing. The exact amount you can free up depends on the asset type, age, condition and lender criteria.

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Quick summary: can hotel equipment be refinanced?

Most hotel owners and operators can access finance against existing equipment to release working capital — provided the assets have demonstrable value and there is suitable security. Typical equipment that lenders accept includes commercial kitchens, laundry plants, HVAC systems, lifts, furniture & fittings, AV systems and large refrigeration units.

Key takeaways:

• Typical loan-to-value (LTV) ranges: around 20%–60% depending on asset type, age and lender.
• Speed to funds: from a few days for straightforward re-advances to 2–3 weeks for sale & leaseback or complex valuations.
• Minimum transaction size generally begins at around £10,000 of capital value for most specialist asset lenders.

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Why hotel owners refinance equipment (benefits)

Refinancing hotel equipment is a practical way to unlock cash tied up in fixed assets without selling your business. Typical benefits include:

• Release working capital: Convert kitchen lines, laundry units or furniture into cash to cover payroll, stock or seasonal costs.
• Fund refurbishments or upgrades: Reinvest in rooms, public areas or sustainability projects without taking on unsecured debt.
• Reduce borrowing costs: Replace overdrafts or expensive short-term credit with structured finance.
• Improve cashflow planning: Smooth seasonal income fluctuations with predictable repayments.

Example (hypothetical): A 40-room boutique hotel refinanced its kitchen and laundry plant via sale & leaseback, raising cash to fund a lobby refurbishment and avoiding an overdraft drawdown.

Common asset refinancing options for hotels

Below are the principal ways hoteliers release cash from equipment. Each route has pros, cons and different cost profiles.

Sale & leaseback

What it is: You sell an owned asset to a funder and immediately lease it back on agreed terms.

Best for: Large, fixed, high-value items (kitchen lines, laundry plants, lifts).

Pros: Immediate cash injection; minimal operational disruption; transfer of residual risk to buyer in some cases. Cons: Ongoing rental payments, potential VAT and balance-sheet differences.

Typical terms: Lease terms from 2–10 years depending on asset and lender. Time to complete: 1–3 weeks for well-documented assets.

Asset refinance / asset-backed loan

What it is: A lender advances funds secured against the value of assets you already own (re-advance or re-mortgage of the equipment).

Pros: You retain ownership; often quicker and lower ongoing cost than sale & leaseback. Cons: Lower LTVs than sale & leaseback; lender takes a security interest.

Typical terms: 1–5 year facilities commonly available; valuation required.

Chattel mortgage & hire purchase refinancing

What it is: Classic asset finance structures often used to purchase equipment. Existing hire purchase or chattel mortgage agreements can sometimes be refinanced to improve cashflow.

Pros: Can restructure repayments; preserve use of equipment during refinancing. Cons: Early settlement fees and varying tax implications.

Other options

• Commercial mortgage top-up: If equipment is part of a property-secured package, some lenders include equipment in a mortgage re-advance.
• Invoice finance blended with asset security: For operators with strong invoicing needs, blended facilities can combine assets and receivables.

Practical note: Lenders will either inspect assets physically or use a desktop valuation. Age, condition and OEM support significantly affect values.

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What lenders look for – eligibility checklist

Lender and broker criteria vary, but the following documents and factors are commonly required:

• Business trading history (typically 12–24 months for mainstream lenders).
• Proof of ownership or titles for the equipment (invoices, maintenance records).
• Asset details: make, model, serial numbers, age and condition photos.
• Recent financial statements, bank statements and VAT returns where applicable.
• Business plan or reason for the refinance (e.g., refurbishment, cashflow smoothing).
• Details of existing debt and any outstanding finance on the same assets.
• Directors’ details — some lenders may request personal guarantees for corporate borrowers.

Special cases: Start-ups or businesses with recent credit issues can sometimes access specialist asset lenders — but expect higher costs and lower LTVs.

How lenders value hotel equipment

Lenders use one or more of the following valuation approaches:

• Market value: What the asset would fetch on the open market today.
• Replacement cost: What it would cost to buy a comparable new item (used for bespoke equipment).
• Net book value: The figure on your balance sheet after depreciation.
• Residual/salvage value: Useful for older assets nearing end of life.

Typical LTV examples (illustrative only): stainless-steel commercial kitchen — LTV 30%–60%; large laundry plant — 35%–55%; furniture & fittings — 20%–40%. Exact offers depend on lender appetite and inspection results.

Costs, terms and potential pitfalls

Costs you should expect and check carefully:

• Arrangement or facility fee.
• Valuation and inspection fees (one-off).
• Interest rate / lease rental and any linked margin.
• Early repayment or settlement charges on existing agreements.
• Insurance and maintenance covenants (often mandatory in secured deals).

Watch-outs:

• Don’t over-secure: granting wide security over business assets can restrict future borrowing flexibility.
• Consider VAT and tax treatment (speak to your accountant for capital allowances implications).
• Sale & leaseback may be costlier long-term due to rental payments — compare total cost of ownership.

For clarity: UK Business Loans introduces you to lenders and brokers who can explain product-specific terms — always review full terms before you sign.

Step-by-step: how to apply and what to expect

Here’s a practical route from enquiry to funds:

1. Gather documents: asset lists, photos, ownership evidence, recent accounts, bank statements.
2. Submit an enquiry: complete a short form and tell us the assets and cash required. (This is an enquiry only and not a formal application.)
3. Matching: We connect you with lenders/brokers suited to your sector and asset type.
4. Valuation & checks: Lender arranges inspection or desktop valuation and conducts credit checks.
5. Offer & documentation: Accept an offer, sign agreements and meet any conditions (insurance, security filings).
6. Funds / completion: For re-advances, funds can be released quickly; sale & leaseback usually completes within 1–3 weeks from acceptance.

Time to decision varies by complexity — straightforward asset re-advance can be quoted within days; sale & leaseback typically takes longer.

Completing our form is free and will not affect your credit score. We match you with lenders and brokers who can provide tailored offers.

Who we help (hotel types & scenarios)

We commonly assist:

• Independent and boutique hotels
• Small regional chains and multi-site operators
• Serviced apartments and aparthotels
• Franchised properties needing refurbishment or seasonal cashflow

If you manage multiple sites or large estate portfolios, specialist lenders exist who will value pooled assets.

Frequently asked questions

Ready to see what you could release from your assets?

Complete a short, no-obligation form and we’ll match you with lenders and brokers who understand hotels. We’ll use the details you provide to find the best possible options for your needs.

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Further reading & useful resources

• Financial Conduct Authority — financial promotions guidance
• British Business Bank — business finance overview
• HMRC — capital allowances

Content by: Finance Content Specialist — Published: 13 October 2025 — Last updated: 13 October 2025

Reviewed by: Senior Commercial Finance Broker