What is asset refinance?

Asset refinance turns equipment you already own into cash. The lender values what you have, advances a proportion of that value, and takes security over it. The kit never leaves your yard and you carry on using it exactly as before.

How it differs from asset finance

It is the same family of products running in the opposite direction.

• Asset finance helps you acquire equipment you do not have. The lender pays your supplier.
• Asset refinance releases cash from equipment you already have. The lender pays you.

What qualifies

Hard assets with a clear resale market work best: commercial vehicles, HGVs, trailers, construction and agricultural plant, manufacturing machinery, CNC equipment.

They need to be identifiable by serial or registration number, in reasonable condition, and not too old for the asset type. A lender has to be able to point at exactly what it holds security over.

Soft assets such as IT equipment, office furniture and shop fit-outs are much harder, because they hold little value second hand.

You can often refinance assets that still have finance on them, provided the outstanding balance is low enough that there is meaningful equity left to release.

Expect the valuation to disappoint

This is the most common surprise. The lender values the assets on what they would fetch in a sale it had to run, not what you paid and not what they are worth to you as a working business.

Well-maintained hard assets with strong resale demand fare best. Service history genuinely helps.

The honest test

Asset refinance is a good idea or a bad one depending entirely on what you do with the money.

Releasing cash from a paid-off machine to fund a contract that generates a solid return is sound. Releasing it to cover ongoing losses converts an owned asset into a monthly liability and rarely ends well.

The question to answer before you sign: will the released cash earn more than the facility costs? If you cannot answer that clearly, do not do it.