How to leverage equipment financing as a sole trader

It’s a common story. A small business is presented with a big opportunity, but there’s a problem – they don’t have the equipment required to fulfil the order or the funds to acquire new tools. 

Does this sound like you? 

Maybe that’s a story that resonates with you. Maybe you’ve come to a crossroads as a sole trader. A moment in time where a new piece of equipment means the difference between growth and stagnation. The difference between an opportunity that could change everything and continuing business as usual.

You’re not alone. 

Equipment finance can help you seize opportunities without depleting your cash reserves or sacrificing ownership. 

What is asset finance?

Equipment finance, a form of asset finance, is a popular financing solution. Asset finance contracts reached £3.8 billion in March 2024 and around 79.3% of companies opted for financial solutions when purchasing equipment. 

It’s no surprise many have turned to this form of funding – asset finance is designed specifically to help sole traders and businesses acquire or lease the tools, machinery, or technology they need to operate and expand. Rather than impacting cash flow by paying the full amount upfront, with asset finance, you’re able to spread the cost over a specific time period.

Please note that asset finance typically requires an upfront deposit and there is less flexibility with early repayments.

Why is asset finance desirable for sole traders?

With 56% of private sector businesses being owned and operated by a single person, sole traders represent a significant proportion of the UK’s business landscape. Yet, sole traders often find it more difficult to attain funding when compared to their limited company counterparts. Not to mention, when they do find funding they’re often asked to put forward a personal guarantee or use private assets as collateral. 

Asset finance can, in some circumstances, be a more suitable option for sole traders than business loans. This is because depending on the type of asset finance solution, the security for the loan is built into the product in the form of the asset itself, meaning sole traders won’t need to put forward their own collateral. 

It’s easy to understand why when you look at it from the lender's perspective. Imagine, for example, you’re a lender comparing a £20k unsecured loan versus a £20k hire purchase agreement. In the case of the unsecured loan, if the borrower defaults, it may be harder to reclaim your investment. Whereas with the latter, the lender retains ownership so if repayment isn’t made they’re able to repossess the asset, so they won’t lose out on their investment. 

This improved ease of accessibility can make equipment finance a desirable option for sole traders. 

Compare asset finance options for sole traders

Looking for asset finance to fund your equipment needs? Whether you’d like to take out a lease on a new car or need to purchase a new industrial fridge, we’re here to help you find a suitable lender. Just click the link below and fill in the information to find out how much you’re eligible to borrow.

Find asset finance for sole traders.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.