Asset finance continues to be one of the most popular and practical routes to funding business growth and recent data confirms that appetite for this type of borrowing remains strong, particularly among smaller businesses.
Figures from the Finance & Leasing Association (FLA) show that new asset finance lending to SMEs grew by 3% in January 2026 compared with the same month the previous year.
Over the twelve months to January 2026, total new asset finance business was 1% higher than the prior year, with plant and machinery finance up 2% and business equipment finance rising by 13%.
For businesses looking to invest in equipment, vehicles, technology or machinery without depleting working capital, asset finance offers a compelling solution.
Rather than making a large upfront purchase, businesses spread the cost over time, preserving cash flow for day-to-day operations and other investment priorities.
There are several structures to consider:
The key challenge with asset finance is ensuring that the repayments that need to be made are aligned with the revenue that the asset will generate.
Taking on a large monthly commitment to fund equipment that takes time to become productive can create short-term pressure on cash flow.
A sensible approach involves stress-testing your financial projections before committing to a finance agreement, considering what happens if revenues are slower than expected or interest rates change.
It is also worth comparing the total cost of financing against the cost of purchasing outright, factoring in the opportunity cost of tying up cash.
The FLA’s chief economist has noted that businesses are “prioritising resilience over expansion” in the current environment and that a recovery in investment will depend on clearer signals on inflation and interest rates.
Asset finance, used wisely, can help businesses invest confidently without overexposing their balance sheet.
Not all asset finance products are the same and the terms offered by different lenders can vary significantly.
Working with a corporate finance adviser who understands the asset finance market can help you identify the most appropriate product and negotiate competitive terms.
Choosing the right asset finance arrangement can make a significant difference to both your cash flow and long-term financial position.
We work closely with businesses to ensure funding solutions are properly aligned with their operational needs and growth plans. From assessing the most suitable structure to navigating lender options, our team provides practical, tailored advice at every stage.
Get in touch with our Partner, Rahid Rashid (rahidrahid@lubbockfine.co.uk), to explpre how asset finance could support your investment plans while protecting your cash flow.
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