Asset finance vs a business loan: which is right?
If you need funds for your business, two paths come up: asset finance, or an unsecured business loan. They look similar from the outside but work very differently, and using the wrong one can cost you more than it should.
This guide explains the difference, what each costs, and which suits which job. General information from the broker's chair.
The core difference
Asset finance is secured by the asset you are buying. The truck, machine or vehicle backs the loan, so the lender takes less risk and the rate is generally sharper. An unsecured business loan is not tied to a specific asset. It is flexible cash, but because the lender has no security, it carries a materially higher rate and usually a shorter term.
When asset finance is right
Whenever you are buying a specific, identifiable asset, vehicle, truck, plant, equipment, asset finance is almost always the better tool. You get a sharper rate, a term matched to the asset's life, and clear tax treatment (depreciation and interest, or deductible rentals). See our complete guide to asset finance.
When a business loan fits
An unsecured business loan suits needs that are not a single asset: working capital, covering a cash-flow gap, stock, marketing, or fit-out costs that have weak resale value. You pay more for the flexibility, but sometimes flexibility is exactly what you need.
Side by side
| Asset finance | Unsecured business loan | |
|---|---|---|
| Security | The asset itself | None |
| Rate | Generally sharper | Materially higher |
| Best for | Buying a specific asset | Working capital, flexible spend |
| Term | Matched to asset life (often 1-7 yrs) | Usually shorter |
You can use both
Many businesses do. Finance the truck or machine with asset finance to keep that cost low, and use a business loan for the working capital around it. If you already own equipment outright, there is a third option: refinance it to release cash, which is often cheaper than an unsecured loan. See our guide to sale and leaseback.
This is general information only and not financial, credit, or tax advice. Consider your own circumstances and speak to a professional. All finance is subject to lender assessment and approval.
Frequently asked questions
Is asset finance cheaper than a business loan?
Generally yes, when you are buying a specific asset. Asset finance is secured by the asset, so the rate is usually sharper than an unsecured business loan, which carries a higher rate for the flexibility.
When should I use a business loan instead?
When the need is not a single asset: working capital, a cash-flow gap, stock, marketing, or fit-out costs with weak resale value. You pay more for the flexibility.
Can I use both?
Yes. Many businesses finance the asset with asset finance and use a business loan for working capital. If you own equipment outright, refinancing it can release cash more cheaply than an unsecured loan.
Ready to finance your next asset?
Not sure which you need? Talk to a Ventas broker. We will point you to the cheaper tool for the job, across 40+ lenders.
This article is general information only and not financial, credit, or tax advice. Ventas Asset Lending is a finance broker, not a lender. Approvals are subject to lender assessment. Consider your own circumstances and speak to a qualified professional, including your accountant for any tax questions.