Asset refinance as an alternative lending solution for small business owners

Earlier this year, we reported that traditional bank lending has dropped to a 30-year low. So, what does that mean for small business owners looking for finance?

Our blog, Where small businesses are finding finance in 2026, aimed to answer that question (Quick answer: alternative lenders, such as Funding Circle, of course). 

For owners of asset-heavy businesses, the solution could be sitting right in front of you. Often capital is tied up in assets, such as equipment or vehicles. Refinancing can free up cash without having to sell the equipment that's so integral to your operations.

Here's how asset refinancing works and why it might be the financial solution your business needs.

What is asset refinancing?

Asset refinancing involves using your existing business assets as security to access additional funding. Instead of selling valuable equipment or machinery to raise capital, you can borrow against their current market value while continuing to use them in your day-to-day operations.

As a method to raise finance, it can be helpful for businesses that have invested heavily in equipment and vehicles over the years. Rather than letting these assets sit as dormant capital on your balance sheet, refinancing allows you to put their value to work for your business growth.

The cash flow challenge

Many successful businesses find themselves in a position where they own valuable assets but lack the liquid cash needed for immediate opportunities. You might need to:

• Take advantage of bulk purchasing discounts from suppliers

• Cover unexpected expenses or late invoice payments

• Invest in marketing campaigns during peak seasons

• Bridge gaps when customer payments are delayed

• Fund expansion into new markets or locations

In some scenarios, traditional bank loans can be slow and require extensive paperwork, while selling assets means losing the tools you need to operate at your best. Asset refinancing can provide a middle ground that addresses both challenges.

How asset refinancing works

The process typically involves having your existing assets professionally valued, then borrowing a percentage of their current worth. Depending on the asset type and its condition, you might be able to access between 60% and 80% of the asset's value.

For example, if you own delivery vans worth £50,000, you might be able to refinance them to access £35,000 to £40,000 in working capital. The vehicles remain in your possession and continue generating revenue for your business, while you gain the cash flow flexibility to pursue new opportunities.

*Note, the amount you can borrow against the value of the asset will vary by lender. It is important to conduct your own research to find the best solution for your business. Figures here are for illustrative purposes only.

Benefits beyond immediate cash

Asset refinancing offers several advantages over other funding options, including:

Competitive rates

Because the loan is secured against your assets, lenders may offer more competitive interest rates than unsecured business loans or credit cards.

Retain ownership

Unlike selling assets outright, you keep full ownership and use of your equipment while accessing its capital value.

Tax efficiency

In many cases, the interest on asset refinancing can be offset against business profits, potentially reducing your overall tax liability.

*Note, this is not to be treated as tax advice. Please seek professional advice regarding tax liabilities. Funding Circle does not provide financial or tax advice. 

Flexible terms

Most asset refinancing arrangements offer flexible repayment terms that can be structured around your business's cash flow patterns.

Considerations when refinancing assets

While asset refinancing offers clear benefits, there are important considerations to keep in mind. These include:

Risk to your assets

Your equipment serves as security, so you could lose these essential business tools if you can't make repayments.

Asset depreciation

Most assets lose value over time, meaning you'll likely borrow less than their original purchase price.

Additional debt burden

Taking on additional debt can create another monthly payment obligation that your cash flow needs to support consistently.

Limited borrowing power

You typically can only access 60% to 80% of your asset's current value, not the full amount.

Restrictions on use

Some agreements may limit how you can modify or relocate your financed assets. For example, you might be required to keep vehicles registered in the UK or ensure machinery stays at a specified site for the duration of the finance term.

Funding Circle's asset finance solutions

While asset refinancing can be a valuable solution, it's not available to every business or suitable for all situations. Funding new equipment through asset finance can still help improve your cash flow by preserving working capital.

We understand that every business has unique financing needs. Our asset finance service connects you with a panel of trusted partners who can fund a wide range of business assets and offer deals tailored to your specific situation.

Whether you're looking to fund new vehicles, machinery or equipment, our experienced account managers work with you to navigate the available options and find a deal that works for your business. We can arrange funding for almost any business asset, from cars and vans to manufacturing equipment and agricultural machinery.

Is asset refinancing a good idea for your business?

Asset refinancing works well for businesses that have invested in quality equipment over time and now need working capital to capitalise on growth opportunities. It's especially valuable if you need funds quickly but don't want to disrupt your operations by selling essential assets.

Just make sure you have assets with strong residual value and a clear plan for how the additional working capital will benefit your business.

If you think leveraging your existing assets as collateral could help your business grow, you can see how affordable your asset finance loan could be with our quick online calculator.*

*Please note the calculator is designed to give an estimate of what you could borrow. Credit limits and rates are subject to a full credit assessment.

Alternatively, complete our simple online form and an Account Manager will contact you to review your options, find the right deals and put you in the best position to get approved.

At Funding Circle we’ll always look to get you the right product for your business. When you apply for asset finance through Funding Circle we can assess you for a business loan at the same time. If we believe one of our other products would be a better fit for you, we’ll let you know. 

12/10/26: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.