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    £From 24 to 60 months

    Lease Finance


    Finance Leases 

    As you are not the owner of the asset, you cannot sell the asset during the rental period. The finance company can claim the writing-down allowances and pass this benefit to you in reduced the rentals. 

    Operating Leases 


    • Funds around 25% of all fixed capital investment, other than property and own-account software in the UK .  

      • Provides finance to around 20% of all SMEs, and to around 33% of SMEs that seek external funding

      • Is particularly important in the manufacturing, agriculture and transport sectors, and in the North East, North West and South West.

    • The two main forms of Asset Finance are Leasing and Hire Purchase

    Under a leasing agreement, the leasing company or lessors buys and owns the asset. The customer, or lessee, then hires the asset, paying rental over a fixed period. At the end of the contract, the customer usually has a choice of extending the lease, buying the asset or simply returning it.

    Hire Purchase is a financing solution for companies wishing to purchase business assets. The customer pays an initial deposit, with the remainder of the balance and interest paid over a period of time. On completion, ownership of the asset transfers to the customer. 


    Sources of Asset Finance 


    Finance and Operating Leases


    1. If "substantially all the risks and rewards" of ownership are transferred to the lessee then it is a finance lease.  
    2. If it is not a finance lease then it is an operating lease.


    • Assets and capital equipment can be paid for from the revenue they earn


    • Rates can be as competitive, or even better, than bank funding rates because of the security provided by the asset


    • Longer-term options than many bank loans, typically 3 to 5 years


    • Fixed rates are available, making budgeting easier


    • It is generally non-cancellable by the lender, providing certainty to businesses


    • Asset finance offers real value to businesses with limited capital, or those that need to manage their cash flow.


    • It is highly accessible, as it is secured - largely or entirely - on the asset being financed.


    • It can be very cost effective, as the provider can often buy assets lower, and sell higher, than an individual business. Companies can choose to leave the acquisition and disposal of equipment to the experts


    • In a recession, leasing is particularly well positioned to help businesses when most have low taxable profits


    • Depending on the situation, companies may benefit from tax advantages




    The FLA Business Finance Code 

    1.  FLA members will abide by the Code and all relevant laws and regulations, will trade fairly and responsibly with customers, and will promote responsible trading between intermediaries and customers.

    2. Before a business finance agreement is contracted, FLA members will provide customers with appropriate information.

    3. FLA members will make business finance agreements that are clear and fair.

    4. FLA Members will provide effective customer service.

    5. FLA Members will clearly explain the options available to customers at the expiry or termination of business finance agreements. 


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