What Asset Refinance Is
Asset refinance releases cash from kit a business already owns. Rather than selling, the business pledges the asset as security against a finance facility. The lender advances a sum against its value, and the business repays over an agreed term — usually keeping the asset in daily use throughout.
Think of it as unlocking capital sitting idle in vehicles, machinery, or equipment. A balance sheet asset becomes working cash, and operations carry on uninterrupted.
This is not the same as new asset finance to buy something. Here, the asset already exists and is already earning its keep. The finance is against what you own, not what you are acquiring.
How It Works
The lender assesses the asset’s current market value — usually through an independent valuation or industry price guides for common asset types. They then advance a percentage of that figure, typically 70 to 80 percent for hard assets in sound condition.
The business receives the funds and begins repaying over a set term, typically two to five years. The asset stays in use throughout.
In a sale-and-leaseback structure, legal title transfers to the lender and you continue using the asset under a lease. In a secured loan structure, the asset stays in your ownership as collateral.
At the end of the term, if every payment has been met, the sale-and-leaseback route lets you reacquire title for a nominal fee. With a secured loan, the charge on the asset is simply released.
What Assets Can Be Refinanced
Hard assets with clear resale values are the strongest candidates: commercial vehicles, HGVs, construction plant, agricultural machinery, manufacturing kit, and printing equipment. Established second-hand prices give lenders confidence in the security.
Specialist or one-off equipment — machinery configured for a specific production line, say — is harder to refinance. The secondary market is thin and lenders cannot easily recover value in a default. Technology and software fall into the same trap and rarely qualify.
Age and condition matter. Most lenders will not refinance assets beyond a certain age, and the advance rate falls as condition or residual value deteriorates.
Why Businesses Use Asset Refinance
The most common trigger is structural cashflow pressure rather than a short blip — the business needs liquidity but does not want to pile on unsecured debt. Refinancing owned assets costs less than unsecured borrowing for the same profile, because the lender has security.
Others use asset refinance to fund growth — expanding a fleet, financing a new contract, or bridging while a term loan completes. Speed is the draw: asset-backed finance moves faster than longer underwriting routes.
A third scenario: assets were bought outright and the equity is locked up, generating no return. Extracting cash from a fully-owned fleet to fund working capital can lift return on assets noticeably.
Cost and Rate Expectations
Asset refinance rates sit below unsecured business loans for the same borrower, because the lender holds security. Bank and specialist lender rates run from roughly 6 to 15 percent APR, depending on asset, age and condition, loan-to-value ratio, and the business’s credit profile.
Arrangement fees of 1 to 2 percent are standard. Some lenders charge a valuation fee on top. Always work out the net advance — cash received after fees — before comparing offers. The headline rate alone hides the real cost.
Risks to Understand
The primary risk is losing the asset if repayments slip. In a sale-and-leaseback, the lender holds title, can terminate the lease, and recover the asset on default. You lose both the cash and the use of it.
Refinancing a business-critical asset — the only van in a delivery fleet, the production line itself — adds operational risk on top of the financial exposure. If it is repossessed, you may not be able to trade. Factor that concentration risk in before pledging critical kit as security.
Asset Refinance vs Secured Business Loan
A secured business loan uses assets as collateral, but the loan sits against the overall business rather than a specific item. Asset refinance ties the facility directly to one or more identified assets, with advance rates set by their individual values.
Asset refinance usually moves faster, demands less financial paperwork, and can be arranged by specialist lenders outside your main bank relationship.
A secured business loan may stretch to a larger facility at lower cost for strong businesses with substantial overall collateral. The right call depends on how much capital is needed, how quickly, and what security you have to offer.
How We Checked This
Asset refinance structures and advance rate ranges reflect current UK asset finance market practice as of April 2026. Rate ranges sourced from specialist UK asset refinance lenders. Sale-and-leaseback mechanics align with Finance & Leasing Association (FLA) guidance.
Specific advance rates, terms, and eligibility depend on lender, asset type, condition, and business credit profile.