The Growth Guarantee Scheme can support asset finance — funding for equipment, machinery and vehicles — alongside term loans, overdrafts and invoice finance. The asset usually provides the security, the government guarantee reduces the lender’s risk to improve access, and you spread the cost over the asset’s useful life to protect cash flow. You apply through an accredited lender that offers asset finance under the scheme; not every lender does.
Key takeaways
- Asset finance is one of the scheme’s supported facility types.
- It funds equipment, machinery, plant and vehicles for trading businesses.
- The asset typically provides the security for the facility.
- Spreading the cost over the asset’s life protects working capital.
- Your principal private residence cannot be taken as security under the scheme.
- Apply through an accredited lender that offers asset finance — not all do.
For established businesses that rely on equipment, machinery or vehicles, the Growth Guarantee Scheme can do more than provide a term loan — it can back asset finance too. This is a powerful option for funding the capital items a business needs to grow, while spreading the cost over time and protecting cash flow. This guide explains how scheme-backed asset finance works, the types available, how the government guarantee applies, and how to apply.
What is asset finance?
Asset finance is funding used to acquire — or release value from — business assets such as equipment, machinery, plant and vehicles. Instead of paying a large sum upfront, you spread the cost over time through products such as hire purchase, finance leasing or equipment loans. The asset itself usually provides security for the facility, which is part of what makes asset finance accessible. Under the Growth Guarantee Scheme, this familiar product gains the added benefit of a government guarantee to the lender.
How the scheme applies to asset finance
The mechanism is the same as for other scheme facilities. The government provides the accredited lender with a partial guarantee against the outstanding balance, reducing the lender’s risk and encouraging it to approve viable businesses. The asset finance itself behaves as normal — you fund the asset and repay over the term — with the guarantee operating in the background between the lender and the British Business Bank. As always, you remain fully liable, and the guarantee improves access rather than reducing your liability.
What you can fund
Scheme-backed asset finance typically covers the capital items a trading business needs, such as:
- Manufacturing machinery and plant.
- Commercial vehicles and fleet.
- IT, technology and office equipment.
- Specialist trade and sector-specific equipment.
Many lenders fund both new and used assets, though criteria vary by lender and asset type, so confirm that your specific asset qualifies.
Common types of asset finance
| Type | How it works |
|---|---|
| Hire purchase | Spread the cost; you usually own the asset at the end once payments are complete. |
| Finance lease | Use the asset for the term without owning it; flexible end-of-term options. |
| Equipment loan | A loan to buy the asset, repaid over a term suited to its life. |
The right structure depends on whether you want to own the asset, the tax position and your cash-flow preferences — worth discussing with the lender and your accountant.
Security and your home
With asset finance, the asset typically serves as security for the facility, which is one reason it can be more accessible than unsecured borrowing. Whether any additional security or personal guarantee is required is at the lender’s discretion. Importantly, under the Growth Guarantee Scheme a lender cannot take your principal private residence as security, which is a valuable protection for directors.
Why asset finance protects cash flow
The central appeal of asset finance for an established business is cash-flow efficiency. Rather than tying up a large lump sum in a single purchase, you spread the cost over the asset’s useful life — often matching repayments to the period over which the asset earns its keep. This preserves working capital for day-to-day needs and growth, while still giving you the equipment you need now.
Matching the finance term to the asset’s useful life keeps repayments sensible and means the asset is helping to pay for itself as you use it.
Cost and comparison
The accredited lender sets the rate and any fees, priced against the asset, the term and your circumstances. As with all scheme facilities, the guarantee improves access rather than guaranteeing a lower rate, so compare the total cost of credit across accredited lenders. Asset finance is often a strong option for equipment because the asset provides security and the term can be matched to its life, but it is worth comparing against a term loan for your specific purchase.
How to apply
- Identify the asset and supplier, and the amount you need.
- Find accredited lenders that offer asset finance under the scheme (or use a broker).
- Prepare recent accounts, management figures and bank statements or open-banking access.
- Apply, and let the lender assess the asset and your business.
- Compare any offer on total cost and terms before accepting.
The bottom line
Scheme-backed asset finance is an effective way for established businesses to fund equipment, machinery and vehicles while protecting working capital and benefiting from the government guarantee that improves access. The asset typically provides the security, your main home is protected, and the cost is spread over the asset’s life. Choose an accredited lender that offers asset finance under the scheme, compare the total cost, and match the term to the asset to make the most of it.
Frequently asked questions
Does the Growth Guarantee Scheme cover asset finance?
Yes. Asset finance is one of the facility types the Growth Guarantee Scheme can support, alongside term loans, overdrafts and invoice finance. It lets established businesses fund equipment, machinery and vehicles with a government guarantee reducing the lender’s risk.
What is asset finance?
Asset finance is funding used to acquire or release value from business assets such as equipment, machinery and vehicles. Common forms include hire purchase, finance leasing and equipment loans, where you spread the cost over time rather than paying upfront.
What assets can I fund under the scheme?
Typically business equipment, machinery, plant and vehicles needed for trading — for example manufacturing machinery, commercial vehicles, IT and other capital items. The specific assets supported depend on the accredited lender and the scheme rules.
How does the government guarantee apply to asset finance?
As with other facilities, the government provides the accredited lender with a partial guarantee against the outstanding balance, reducing the lender’s risk. The asset finance itself works as normal; the guarantee operates behind the scenes between the lender and the British Business Bank.
Do I own the asset with scheme-backed asset finance?
It depends on the type of agreement. Under hire purchase you usually own the asset at the end once payments are complete; under a lease you typically use the asset for the term without owning it. The structure depends on the lender and product, so check before signing.
Is the asset itself the security?
With asset finance, the asset typically provides security for the facility. Whether any additional security or personal guarantee is required is at the lender’s discretion, though under the scheme your principal private residence cannot be taken as security.
How much can I fund through scheme-backed asset finance?
The scheme supports facilities up to a defined maximum per business group (up to £2 million for most businesses), subject to scheme rules and the lender’s assessment. The amount for a specific asset depends on its value and your affordability.
Who sets the rate on scheme-backed asset finance?
The accredited lender sets the rate and any fees, priced against the asset, the term and your circumstances. The guarantee improves access rather than guaranteeing a lower rate, so compare the total cost across lenders.
Can I fund used as well as new equipment?
Many lenders fund both new and used assets, though criteria vary by lender and asset type. Used or specialist equipment may be assessed differently. Confirm with the accredited lender whether the specific asset qualifies.
How long are asset finance terms?
Terms are usually aligned to the expected useful life of the asset, often spanning a few years. A term matched to the asset’s life keeps repayments sensible while you benefit from using it. The lender will propose a suitable term.
Is asset finance better than a term loan for equipment?
Often, yes, because the funding is tied to the asset and the asset provides security, which can make approval easier and spread the cost over the asset’s life. A term loan is more flexible in use. Compare both for your specific purchase.
What documents do I need to apply?
Typically recent accounts and management figures, bank statements or open-banking access, details of the asset and supplier, and director information. Requirements vary by lender, so having organised financials speeds things up.
Can asset finance help my cash flow?
Yes. By spreading the cost of equipment over time rather than paying a large sum upfront, asset finance preserves working capital and keeps cash available for day-to-day needs, which is one of its main attractions for established businesses.
Is approval guaranteed because of the scheme?
No. The lender still assesses affordability, the asset and your business within the scheme rules. The guarantee can tip a viable application toward approval but does not switch off underwriting.
How do I apply for scheme-backed asset finance?
You apply through an accredited lender that offers asset finance under the scheme, or use a broker to find suitable lenders and compare options. The lender assesses the asset and your business and, if approved, sets out the terms.
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Get your free quoteThis article is general information, not financial advice. Eligibility, rates and terms vary by lender and your circumstances. The Loans Hub is a finance broker, not a lender.
