Many UK businesses own assets outright — vehicles, machinery, equipment, or plant — without realising that those assets may represent capital that could be put to work elsewhere in the business. Asset refinancing is a funding solution that allows a business to potentially release capital tied up in assets it already owns, without selling those assets or losing access to them.
In this guide, Percy Finance explains what asset refinancing is, how it works, what assets can be considered, and how working with an independent broker can help you access lenders who operate in this specialist area. All refinancing is subject to status, affordability, and individual lender criteria — there is no guarantee that refinancing will be available for any specific asset or business.
What is Asset Refinancing?
Asset refinancing encompasses a range of structures, the most common of which is sale and HP back, where a business sells an asset it owns outright to a finance company and then enters into a hire purchase or finance lease agreement to continue using it.
The capital received is then repaid over a fixed term through regular monthly payments, with the structure of the agreement — hire purchase or finance lease — determining what happens at the end of the term. Subject to lender approval and the terms agreed, this can allow a business to convert an asset that was sitting on the balance sheet into usable working capital while continuing to use that asset in day-to-day operations.
How Does Asset Refinancing Work in Practice?
The process generally involves a lender agreeing to purchase an asset that the business owns outright. The value attributed to the asset is determined by the lender at the time of the transaction, based on factors including the type, age, condition, and market value of the asset. The business then enters into a hire purchase or finance lease agreement with the lender, making regular payments over an agreed term.
Under a hire purchase structure, ownership of the asset transfers back to the business at the end of the term once all payments have been made. Under a finance lease, end-of-term options vary and are set out in the individual agreement — always review these carefully and seek advice from a qualified accountant before proceeding. verify with your accountant
The amount a lender may be willing to advance against an asset varies and depends on a range of factors. Percy Finance, as a broker, can introduce your requirements to lenders whose criteria may be suitable for your circumstances – but cannot guarantee any specific outcome or advance amount.
What Assets Can Be Considered for Refinancing?
A range of business assets may be considered for refinancing, subject to individual lender criteria. Assets that lenders commonly consider include commercial vehicles and HGVs, construction and civil engineering plant, manufacturing and industrial machinery, agricultural equipment, and other specialist commercial assets. The suitability of any specific asset is determined by the lender at the time of application and cannot be confirmed in advance.
Where an asset is already subject to an existing finance agreement, refinancing options will depend on the individual circumstances and the lender’s criteria. In some cases, a lender may be able to settle an existing agreement and refinance the asset as part of a single transaction — Percy Finance can discuss what may be available based on your specific situation.
What Can The Capital Be Used For?
A potential advantage of asset refinancing is that the capital released may be used for a range of business purposes. Businesses commonly use refinancing proceeds to improve working capital and day-to-day cash flow, fund the acquisition of additional assets or stock, cover one-off business costs such as tax liabilities, or invest in business growth. The British Business Bank provides useful guidance on the broader range of funding options available to UK businesses.
It is important to note that the capital received must be repaid over the term of the finance agreement, and the business will have an ongoing monthly repayment commitment. Always ensure the business can comfortably service those repayments before proceeding.
Key Considerations Before Refinancing
Asset refinancing is not appropriate for every business or every situation. The ongoing monthly repayments represent a fixed cost commitment for the duration of the agreement, and the total amount repaid over the term will exceed the capital initially received. It is essential that businesses understand the full cost of the arrangement before proceeding.
The accounting and tax treatment of a sale and HP back transaction can be complex and will depend on the individual circumstances of the business and the structure agreed. Always seek independent advice from a qualified accountant before entering into any refinancing arrangement. verify with your accountant
As with all finance, asset refinancing is subject to status and affordability assessment. Terms vary between lenders and there is no guarantee that refinancing will be available for any specific asset or business.
Why Use Percy Finance for Asset Refinancing?
Not all lenders offer asset refinancing, and those that do operate with varying criteria in terms of asset types, minimum values, asset age, and business profiles. As an independent credit broker, Percy Finance introduces refinancing enquiries to a panel of lenders across the market — including those who specialise specifically in asset refinancing and sale and HP back transactions.
Percy Finance manages the introduction process from initial conversation through to completion – discussing your requirements, identifying lenders whose criteria may be appropriate for your circumstances, and supporting the application process. Percy Finance is a credit broker and is remunerated by way of a commission paid by the lender — this will be disclosed to you as part of the process.
Other Finance Solutions Percy Finance Can Introduce You to
Asset refinancing is one of a wide range of funding solutions Percy Finance can source for businesses across the UK. Whether you are looking for asset finance for new equipment, vehicle finance for your fleet, a business loan for wider growth plans, or supercar finance for a high-value vehicle, our team works across the market to identify lenders suited to your individual circumstances. We regularly introduce clients to lenders across the following areas: