How asset lending can boost your business cash flow this summer

Summer can be a challenge for some UK businesses. Busy holiday periods can stretch customers’ operations and delay payments, seasonal hiring can put pressure on your payroll, and growth opportunities often arrive just when cash flow feels tightest.

To solve these cash flow challenges, many companies turn to asset lending which allows them to unlock funding quickly using their business assets.

Unlike asset finance, which helps you buy new equipment, asset lending (sometimes called asset refinance) lets you unlock cash from assets you already own. So you could use your property, equipment, invoices, or stock to secure funding to ease your summer cash flow – without the long waits or strict criteria that traditional banks often demand.

In this article, you’ll learn what asset lending is, how it can help, in what summer situations you might need it, and how to apply.

Key points:

• Asset lending uses your existing business assets as security to unlock immediate cash flow

• You could use this boost in cash flow to fund seasonal hiring, stock purchases, and summer growth opportunities

• Funding Options by Tide can help when optimisation of working capital isn’t enough, offering access to business finance up to £20 million

What is asset lending?

Asset-based lending is when a business borrows money using assets it already owns as security (collateral). Essentially, this unlocks the cash value tied up in assets such as property, equipment, invoices, or stock. You retain ownership and use of the assets unless you default on the loan, at which point the lender can seize and sell them to recover their money.

Here’s how it works in practice:

1. You approach a lender with details of assets your business owns.

2. The lender assesses the value and quality of those assets, as well as your ability to repay.

3. If approved, you receive a loan or line of credit secured against those assets.

4. You make regular repayments. If you can’t repay, the lender has the right to recover their money from the asset value.

Asset-based lending is usually a lot faster than traditional business loans because lenders take into account the value of your actual assets rather than business projections. Most lending decisions also happen within days, which can be much faster than the typical weeks or months involved with a business loan.

You can use a wide range of valuable business assets as security. Commercial property often allows you to borrow the largest amounts. Equipment and machinery are also commonly used. Outstanding invoices from creditworthy customers and certain types of stock or inventory may also qualify, depending on their nature and turnover rate.

How does asset lending compare to other types of finance?

Asset lending is one of many funding options potentially available to you, and each has its different advantages:

• Traditional bank loans: Asset lending is usually quicker to secure (days vs. weeks) and has more flexible criteria, as it relies on the value of your assets rather than credit history or cash flow. But it may cost more than some bank loans.

• Asset finance: Asset lending uses your existing assets as security for a loan, while asset finance is typically used to help you buy new equipment or vehicles, with the asset being purchased serving as the collateral.

• Overdrafts: Asset lending can provide larger amounts and longer terms, but overdrafts offer more day-to-day flexibility if you need smaller amounts.

• Invoice finance: Both use business assets as security, but invoice finance specifically targets outstanding invoices, while asset lending can use a wider range of assets, such as inventory or equipment.

• Working capital loans: Asset lending doesn’t usually need as much financial history and is quicker to secure, but working capital loans may offer better rates for established businesses with strong credit profiles.

How could asset lending help your business this summer?

Asset lending offers several practical advantages that can be particularly valuable during your busy/quiet summer months. Whether you’re looking to hire extra staff, build up stock, or take advantage of seasonal opportunities, here’s how it could help:

• Boost your cash flow: Get access to funds more quickly than with many traditional loans (often within weeks) helping you move quickly on summer opportunities

• Preserve your existing credit: Keep your bank overdrafts and credit lines free for day-to-day operations while you use asset lending for larger summer investments

• Access larger amounts: Typically borrow more than unsecured options allow, making it useful for hiring seasonal staff or buying large amounts of stock

• Avoid diluting your equity: Keep full ownership of your business while you access growth capital, unlike when you seek equity investment or crowdfunding

• Move faster: Asset-based lending decisions can be made more quickly than traditional bank loans

• Use flexible security: Secure loans with a range of assets – property, equipment, invoices, or stock – so you have options if one type of asset isn’t suitable

• Work with seasonal understanding: Some asset lenders can structure repayments to suit your seasonal business patterns

• Optimise your balance sheet: Turn idle assets into working capital and drive summer growth rather than letting them sit unused

In what summer situations could it be helpful?

Summer brings unique cash flow challenges and opportunities that asset lending is particularly well-suited to address. Here are some common situations where it could make a real difference to your business:

• Hiring seasonal staff

• Building up stock for the busy season

• Managing extended payment terms

• Seizing unplanned growth opportunities

• Upgrading building facilities

• Investing in a big marketing campaign

• Paying large supplier deposits

• Bridging cash flow gaps

How to apply for asset lending

The application process typically takes around 3-4 weeks, although it can vary depending on the lender and the complexity of the assets involved. There may be some slight differences, but here’s what you can prepare to expect…

Start by identifying which assets could work as security. You’ll need your ownership documents, such as property deeds, equipment receipts, or invoice records. If the asset has changed in value since you bought it, you may need to get a new valuation, although this isn’t always necessary for the initial applications.

Once you’ve identified which assets could be used as security, it’s time to research lenders that specialise in those asset types. Some will focus on backing property while others will prefer equipment or invoice-based arrangements. It’s common to submit an initial application to more than one provider to compare their terms, but be mindful that multiple credit checks can affect your credit profile.

The lenders will assess your assets and business. This could include surveying property, inspecting equipment, or checking customer credit for invoice-based lending. You can use this time to try negotiating terms that work with your seasonal trading patterns.

Most lenders will want to see 12-24 months of trading history, but some work with newer businesses. You’ll need to prove you own the assets, provide basic financial information, and you’ll likely need to give personal guarantees as directors.

Once you decide which lender to go with, you’ll need to complete a formal application and review the legal documentation. Asset lending agreements can be simpler than business loans, but the lender will still need to legally register their claim on your assets as security for the loan.

Hopefully, you’ll receive the lender’s approval and can arrange the release of funds. To maximise its impact over the summer, it’s a good idea to formalise how you’ll use the money – whether that’s for hiring staff, buying stock, or improving your facilities.

The key to success is starting early. If you need funding for peak summer trading, consider starting applications in the spring. This should give you the time to negotiate better terms and make sure the money’s ready when you need it.

Costs and risks of asset lending

It’s important to understand the full costs and potential risks so you can make an informed decision about whether asset lending suits your business.

Typical costs

Interest rates can range from around 7% to 17% per year, depending on your business profile and asset quality. Businesses with strong credit and valuable assets often secure lower rates, while newer companies might face higher costs but still find asset lending more accessible than unsecured alternatives.

Arrangement fees typically range from 1-2% of the loan amount. So a £100,000 facility might cost £1,000-£2,000 to set up. Some lenders also charge monthly monitoring fees, particularly for invoice-based lending, which usually add up to between £50 and £500 per month.

Main risks

Personal guarantees are commonly required, making directors personally liable if the business can’t repay. This puts personal assets at risk, so consider this carefully when planning.

Asset values can change over time, so some lenders include revaluation clauses that could affect how much you can borrow if your assets lose value.

Operating restrictions might also apply to your assets. It’s therefore important to check that the lending terms won’t prevent you from using, upgrading, or selling assets during normal business operations.

Seasonal considerations

Summer trading patterns can create specific risks. If the lending terms require you to make regular monthly payments but your customer payment cycles change during holidays, you could face cash flow shortages. Discuss seasonal payment flexibility with lenders upfront so they may be able to accommodate your needs.

Holiday periods could affect your ability to manage the facility if key staff are away. So make sure there’s a plan to continue processing payments and communicating with lenders during peak holiday periods.

Other factors

Asset lending typically isn’t cost-effective for very small amounts (under £25,000) due to arrangement costs. Traditional overdrafts or business credit cards could be more suitable.

If you need funding for very long terms (over five years), traditional term loans might offer better value despite the slower approval times.

Find business finance with Funding Options by Tide

Whether you’re looking for a standard business loan, a short-term business loan, or something a little more specialist, like auction finance for property developers, we’re one of the leading names in business finance in the UK, having helped facilitate over £1 billion in finance to more than 20,000 customers. 

Checking if you’re eligible is free, only takes a few minutes, and while a full application would impact your personal or business credit score, checking eligibility won’t. Just submit your details via the link below to find out if you could be eligible to borrow up to £20 million.

Find business finance.

FAQs

How quickly can I get the cash I need for summer expansion?

Most asset lenders will give an initial decision within 48-72 hours, with the funding typically taking 1-2 weeks. Invoice-based lending is fastest at 24-48 hours, while property-based lending can take 2-3 weeks. Consider starting your application in spring to make sure you’re ready for summer.

What happens to my assets if I can’t repay during a difficult period?

Lenders have the legal right to recover money from your assets if you default, but most prefer helping struggling businesses rather than seizing the assets immediately. Contact your lender early on if you’re having difficulties – many offer payment holidays or restructuring.

Is asset lending better than extending my overdraft for summer needs?

It depends on how much you need. Overdrafts are usually cheaper for smaller amounts (under £50,000) and short-term needs. Asset lending typically works better for larger amounts or when your bank can't provide enough overdraft. Many businesses use both.

How does asset lending appear on the balance sheet?

Asset lending shows as both an asset (cash received) and liability (debt owed) on your balance sheet. This can affect ratios like debt-to-equity, which might impact future lending applications.

Which documents do I need for an asset lending application?

You’ll typically need to provide business accounts, recent management accounts, asset ownership documents, and personal ID. Ongoing reporting also usually means you’ll need to provide monthly or quarterly statements and updated asset valuations. Thankfully, many lenders now use automated systems that work with your accounting software.

How do I choose the best asset lender?

Compare total costs, not just interest rates. Include arrangement fees, monthly charges, and early repayment penalties. Look for lenders experienced with your asset type and sector, and make sure the terms won’t restrict your peak season activities. A broker can help you compare multiple lenders quickly.

What assets can a newer business use?

Invoice finance is often most accessible for newer businesses since it’s based on customer creditworthiness instead of your own limited trading history. Equipment finance works if you own valuable, resalable assets. Property-based lending is harder if you haven’t built up much equity.

Can I get approval before summer gets busy?

If you start early enough. Many lenders give approval in principle within days, with full documentation taking 2-4 weeks. Starting in spring gives you time to potentially negotiate better terms and avoids the seasonal rush that can slow things down.

How do seasonal patterns affect lending terms?

Many asset lenders understand seasonal businesses and can adjust their terms accordingly. For example, you might get payment holidays during quiet periods or seasonal payment adjustments. Just be upfront about your trading patterns when applying.

What if I need my assets during summer trading?

This shouldn’t be a problem since asset lending uses assets as security rather than taking them away from your business. Your premises, equipment, or stock can usually keep operating normally while they secure the lending. Just check that terms don’t include restrictions that could limit your peak season operations.