How best to finance your business's assets

Banks won’t lend much to small businesses, but there are plenty of other sources of cash.

Borrowing against physical assets such as factories is on the rise
(Image credit: 2013 Getty Images)

British businesses borrowed more money using asset finance than ever before in 2019. Asset financing– borrowing against physical assets ranging from plant and machinery to vehicles and commercial premises – rose by 6% to £35.7bn, according to the Finance & Leasing Association. The Bank of England says banks lent just 0.8% more to small and medium-sized enterprises (SMEs) last year.

The advantages of asset finance include easier access to money, lower costs and greater flexibility. Since businesses are borrowing against the value of a physical asset the lender feels more comfortable advancing credit. And businesses acquire new assets as they grow, allowing them to secure more finance; the facility thus grows in line with the borrower.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Explore More
David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.