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As we approach 2026, many businesses are embracing change and finding new ways to thrive despite ongoing challenges like inflation, climate and sustainability pressures, as well as access to finance. Staying agile and well-prepared for change is a non-negotiable for business owners who want to continue growing. In a time where high-street banks aren’t providing the right support for SMEs, alternative lending options are becoming go-to solutions. One product in particular that has seen an increase in recent years is asset finance. From 2020 to 2025, the market has grown from around £35bn to £47.7bn. That’s a 36% increase over 5 years!
What is asset finance?
Asset finance allows businesses to purchase or lease equipment, vehicles or technology, without having to pay the full cost upfront. Instead, you can spread the cost over an agreed period of time, helping you preserve cashflow whilst having immediate access to the assets you need to continue to operate and grow.
Businesses of all shapes and sizes, from startups to well-established companies, are increasingly using asset finance as an alternative funding option to traditional lending. It offers business owners a practical way to stay competitive, upgrade out-dated kit and be able to quickly react to changing market demands. All whilst keeping cashflow intact.
Ahead of 2026, businesses are typically using this type of lending to fund fleets of vehicles, manufacturing machinery, IT equipment and even green energy solutions.
Why is it important for your business?
Asset finance should be on your radar as an important financial product. Whilst business may be booming and you’ve been able to make large upfront investments, like shop refurbishments, vehicle purchases and bulk buying, it can also leave your cashflow on the light side. Businesses are now opting to remain competitive by keeping cash in the bank and use asset finance to fund equipment purchases instead.
When asset finance is used as part of your wider strategy, it opens up an opportunity to reinvest capital back into the business without using cashflow reserves. This can then be used for marketing campaigns, operational efficiencies, staffing and even acquisition plans.
How will asset finance benefit your business?
If you choose to fund your capital equipment investments through asset finance, there are several benefits. Including:
- Improving cashflow as no large upfront payments need to be made.
- Fixed monthly payments that help with budgeting and financial planning.
- Access to equipment they need straight away.
- Some possible tax advantages, such as capital allowances (Speak with your accountant for more information).
By utilising asset finance as a strategic tool, you can be smarter with your cash and focus on your future plans.
Funding green energy projects
Businesses can use asset finance as an option to fund green energy initiatives. Doing this provides you with the chance to adapt to sustainability by investing in more environmentally friendly projects such as electric cars, renewables and sustainable infrastructure. This helps you take the first steps to reduce your carbon footprint, meet the Government’s Net Zero target of 2050 as well as show that you’re championing green energy.
Assets available to finance for green energy projects include:
- Heat pumps
- Solar panels
- Wind turbines
- Biomass boilers
- Voltage optimisers
- Anaerobic digestion
- Combined heat and powers
- Solar battery storage systems
- Electric vehicles and charging points
Business owners are increasingly considering renewable energy projects. This is in an effort to win contracts with customers who also have green energy agendas, adapt to a more eco-conscious market and improve brand reputation whilst remaining ahead of the curve.
Why use asset finance?
Asset finance remains a practical and strategic choice if you’re looking to invest in growth without compromising cashflow. If asset finance isn’t the right fit, other funding options are available. Secured and unsecured business loans, invoice finance and structured finance are all viable products that can be tailored to suit your specific business goals and requirements.
If you want to know more, get in touch. You can call us on 0161 633 2548 or send an email to enquiries@pmdbusinessfinance.co.uk. To keep up to date on what we’re up to, follow us on LinkedIn!