How Does Asset Refinance Work?

Cash flow challenges are common for SMEs, but many business owners don’t realise that a significant amount of working capital can be released through the assets they already own. Asset refinance provides a practical way to release this capital without interrupting business activity.

James Crowson, Senior Commercial Broker at Portman, notes that this is often a pleasant surprise for customers: “Banks can be restrictive, especially when they only lend up to 60% of turnover. Asset refinance can open access to more funding than customers expect.

We work with a specialist refinance lender who can lend up to 120% of an assets value. A recent example was of a customer who had exhausted their loan options and was being offered high rates. By switching to asset refinance, Portman was able to get better terms for the customer leading to £180,000 being released from a vehicle worth £150,000. It was quicker and cheaper than a loan.”

If you’re looking to improve cash flow, support business growth, or raise finance quickly, this guide explains exactly how asset refinance works and whether it’s the right funding solution for your business.

What Is Asset Refinance?

Asset refinance allows a business to access funding secured against assets it already owns. This converts non-liquid items such as machinery, vehicles, commercial equipment, or property into working capital, all while keeping the asset in daily use.

This process appeals to many SMEs because it’s both quick and straightforward. Crowson explains: “For a vehicle, all we usually need is the registration number and mileage. For a machine, we need the name, make, model, and hours worked. For soft assets, we require the purchase date and original invoices. Across all asset types, we also ask for bank statements and accounts. Once everything is in place, funds can even be released within 24 hours.” As a result, asset refinancing is especially effective for companies that need fast access to capital.

How Asset Refinance Works

Crowson explains: “At Portman we typically take a consultative approach. When a business approaches us for funding, we look at all available options which includes understanding their assets to see if refinance rates are possible.”

Here’s a typical step-by-step process:

1. Asset identification

Valuable items such as vehicles, machinery, IT systems, or equipment are assessed for suitability. Portman begins with a desktop evaluation using any supporting photos, and once the agreement is signed, a Portman representative conducts an on-site inspection to verify the equipment.

2. Asset valuation

Lenders assess the asset’s market value to determine how much can be released. We often work with a lender, who can offer up to 120% of the assets value. There’s usually room to negotiate the final amount, and if the equipment is in good condition, you can typically secure a higher advance.

3. Lease or hire-purchase agreement

You then lease or hire-purchase the asset back over an agreed term.

4. Uninterrupted use

Your business continues using the asset throughout the agreement.

5. End of term

Ownership typically returns to you under hire purchase, or you may choose to buy the asset at the end of the lease for a nominal fee.

This is commonly known as a sale and leaseback or sale and hire-purchase back arrangement which allows businesses to unlock immediate cash while keeping operations running smoothly. Crowson adds that even assets with existing finance aren’t a barrier: “If there’s a small balance left, we can usually settle that and refinance the asset under better terms.”

Benefits of Asset Refinance for SME’s

Asset refinance isn’t just a short-term cash solution, it can be an effective strategic tool. Businesses often use it to:

• Access competitive rates, often lower than unsecured loans
• Improve cash flow without selling essential equipment
• Fund growth such as expansion, recruitment, or new projects
• Consolidate or restructure debt
• Avoid large upfront costs
• Maintain operational continuity

Key Considerations:

Before choosing asset refinance, businesses should keep in mind:

• Borrowing limits depend on the asset’s value, age, and condition
• Depreciated or poorly maintained assets may release less equity
• Because the asset is security, missed payments can lead to repossession
• Interest rates and fees vary depending on the lender and asset type
• Some assets have low resale value and may not qualify

This is why many SMEs seek specialist advice to ensure the structure supports their cash flow and long-term goals.

What Type of Assets Can Be Refinanced?

Common types of assets refinanced are:

• Company vehicles and fleets
• Industrial machinery and plant
• Manufacturing equipment
• IT systems and hardware
• Certain types of commercial property
• Medical equipment
• Stock and Inventory

These assets are generally grouped into hard and soft categories.

Soft Assets: including IT equipment, office furniture, catering or fitness equipment, and air-conditioning units depreciate more quickly but can still be suitable for refinancing.

Hard Assets: such as machinery, plant, and vehicles retain value for longer and therefore attract more favourable rates.

Portman can consider refinance for almost any asset type. While hard assets usually secure better terms, a broad range of business equipment can be assessed, particularly items purchased within the last 12 months when they hold the strongest residual value.

We recently refinanced the purchase of new construction vehicles for a manufacturing company in Stafford at a rate of 8.01% AFR.

Common Products Used for Asset Refinance

The most typical asset refinance structures are:

Sale and Leaseback: Sell the asset and lease it back over a fixed term to release capital.

Sale and Hire-Purchase Back: Sell the asset and buy it back gradually through a hire-purchase agreement.

Both options allow continued use of the asset while unlocking immediate cash for your business.

When Asset Refinance May Be The Right Choice

Asset Refinance is often ideal when a business:

• Owns valuable, well-maintained assets
• Wants to release working capital without selling those assets
• Faces temporary cash-flow pressure
• Requires funding for investment, growth or consolidation
• Wants to avoid traditional loans or large upfront costs

Some industries use this option more frequently than others. James explains:
“We see strong demand from logistics, construction, taxis, plant hire, and engineering companies. Even new restaurants with a full fit-out paid in cash can access strong equity release.”

How Portman Can Help

Portman supports businesses access the right asset refinance solution by:

• Assessing asset suitability and value
• Structuring agreements to match cashflow and operational needs
• Accessing funding for both existing and recently purchased assets
• Advising on differences between hard and soft assets
• Securing competitive terms through lender partnerships

Whether you’re freeing up capital, easing financial pressure, or investing in growth, Portman ensures you retain full use of your assets throughout the process.

Is Asset Refinance Right For Your Business?

Asset refinance offers a flexible, practical way to unlock value tied up in vehicles, equipment, or other essential assets. When used strategically it can improve cash flow, support investment, and help businesses navigate short-term financial challenges. With careful planning and with the right guidance, it becomes a powerful tool allowing SMEs to access capital efficiently without disrupting operations.

Written by Tsungai Mutyavaviri

Marketing & Design Executive