Businesses have access to a range of financial products tailored to their needs, helping them achieve their growth objectives. In recent years, the growth of asset finance has enabled businesses to gain access to machinery, vehicles, and hardware, allowing them to scale more quickly without spending huge upfront fees.

If you’re unsure where to start your finance journey and need to know more about the asset finance route and whether it is the right fit, then you’ve come to the right place. Here, we’ll look at the asset finance option in this blog and compare it to traditional loans.

At Shire Leasing, we know how important it is for SMEs to have all the information they need to choose the right finance options for them.

To learn even more and start your asset finance journey, speak to our team today.

What is Asset Finance? How Does it Work?

Asset finance is a type of financial product. It involves a business paying a lender a sum of money over months for access to  a certain type of asset, without having to pay a large up-front fee. The asset itself can range from  vehicles and machinery to IT systems or even niche, specialist equipment.

The finance product is often secured against the asset that the business is using, so if the monthly repayments aren’t made, the lender has the right to repossess it. The lender typically purchases the asset from the supplier and retains ownership of it until the agreement ends. Then, depending on the structure of the agreement, the business may own or return the asset.

What is a Traditional Business Loan?

A traditional business loan is a lump sum of money that the business can spend in the way it sees fit, including purchasing assets. The loans may be secured against property or offered on an unsecured basis. The key difference between asset finance and a business loan is that the latter is not tied to a specific asset.

Pros and Cons of Each for SMEs

Finance Can Be Confusing: How Shire Provides Clarity

Manoeuvring through the world of finance can be very hard for SMEs, especially when they already have a lot on their plate. Asset finance, leases, traditional loans, and hire purchase agreements are all options, but the benefits and characteristics of these often get muddied by unnecessary terminology. When businesses are focusing on sales, marketing, and industry-specific challenges, there isn’t the time to wade through this financial fog - clarity is key.

• Not all finance is the same. There are significant differences between asset finance and traditional loans, with the features of both offering benefits and drawbacks. Combatting this by working with a finance firm that offers clarity from the outset is a great way of staying informed.
  
  
• Finance is often made confusing or off-putting by the terms used, such as ‘balloon payments’ or ‘secured lending’. SMEs need to know they have a lender who can cut through this, talk straight, and help speed up decision-making.
  
  
• Confusion can cost businesses time and money. When SMEs are given clear information, trust grows and the likelihood of investment increases because there’s nothing hidden. When a business understands the options in front of it, the quicker it can act, and in fast-moving sectors, this is a critical advantage.

The team at Shire have helped several SMEs across legacy and newer industries slice through the uncertainty by offering clear plans, devoid of jargon. Our passion to make your business grow keeps us going above and beyond for the businesses we help unlock new assets.

Three Scenarios Where Asset Finance Shines

Knowing  when to push the asset finance button is just as important as understanding what it is. Here are a few typical scenarios our team has come across when hearing from businesses interested in accessing asset finance plans.

“I don’t have the capital to access the latest assets in my industry, meaning I am losing ground to my competitors.”

There are few things more frustrating for SME owners than knowing your competitors are gaining crucial advantages because they are using newer equipment and offering more efficient services to customers, who could be yours, as a result. In this scenario, asset finance gives you near-immediate access to the latest equipment.

“My business is growing, but I don’t have the cash in the bank to keep up with the increasing demand.”

Growth can be extremely exciting for SMEs, it's a chance to achieve the objectives owners have worked so hard for. Growth, though, is only possible if the infrastructure is in place to match it. Asset finance can help you meet that demand by scaling up your infrastructure at a similar rate to your demand, ensuring you can fulfil orders and honour contracts.

“I need a piece of specialist equipment for a lucrative contract, but I don’t want to buy something outright that I might not use again.”

Turning down a lucrative contract because the drawbacks from purchasing a piece of specialist equipment outweigh the benefits of the potential revenue, a scenario you can avoid in 2025. With an asset finance agreement, specialist equipment can be sourced as and when it is needed without it sitting in your warehouse gathering dust. Speed of access to equipment gives you more ways to broaden revenue streams.

Why Asset Finance is Gaining Ground

Asset finance has been gaining ground for a number of years now, and recent data from the Finance & Leasing Association backs this up. They found that asset finance new business increased by 2% in January 2025 compared to the same month the previous year.

This gentle uptick in usage is emblematic of a more long-term appreciation and adoption of this finance model. Its simplicity is part of its appeal; for an agreed monthly fee, businesses can access the equipment they need to grow. The lack of initial capital outlay also appeals to SMEs, who can use this predictability of repayment to budget more efficiently and keep more of their cash.

Asset finance is also gaining ground because traditional lenders have failed to modernise their offering. Greater interest rates combined with a lending criteria that doesn’t fit the modern SME model have seen those businesses look for finance from places that offer greater flexibility. Asset finance usage is set to continue rising as the benefits and versatility of this model become more available to SMEs.

The trick is to work with a trusted lender, such as Shire, who has been at  the forefront of the changes to the asset finance industry in the last 30 years, and one who continues to champion innovation and use technology to provide quicker decisions to more SMEs than ever.

Shire Leasing, Helping SMEs Make Informed Choices

The choices businesses make about how they access capital and assets need to be the right ones. With our dedicated account team, you’ll always have everything you need to make the most informed choices for your business.

Ready to grow your business? Get in touch today.