Asset finance provides businesses with financing to purchase equipment and other assets. In 2018, the Finance and Leasing Association (FLA) provided over £33 billion in asset finance to UK businesses. Asset finance comes in various forms, including finance leases, operating leases, and hire purchase agreements. Each type has different characteristics in terms of ownership, tax treatment, and options at the end of the agreement. Choosing the right type of asset finance depends on factors like whether the business wants to own the asset ultimately. Asset finance can be used flexibly to meet business needs and is becoming increasingly important for SME financing.

1. Asset
Finance
Explained
Everything you need to
know about asset finance, its
benefits and how it works

2. Introduction
In 2018, members of the Finance and
Leasing Association (FLA) provided a
record £33 billion of finance to the
business sector and public services,
a 3% rise on the figure for 2017,
representing over a third of UK
investment in machinery, equipment
and purchased software in the UK
last year.
The FLA is the leading trade association
for the asset finance sector in the UK
and the largest organisation of its type
in Europe.
Recognition of the importance of asset
finance is growing among small and
medium-sized enterprises (SMEs), but
issues regarding access to funding
and a knowledge of how asset finance
works remain.
In this book, we will look to explain
the different types of asset finance
available, the benefits they can offer to
your business, the VAT implications and
to understand stage payment deals.
Asset finance enables you to obtain a wide
range of equipment necessary to operate
efficiently and effectively. Wholly or largely
secured on the assets being financed, asset
finance also gives you some flexibility to
replace or upgrade equipment at any time.

3. Chapter 1
What is
Asset
Finance?

4. Asset finance is finance
that is taken out by a
business and secured against
an asset. It is provided to
all businesses including
companies, partnerships &
sole traders to finance the
acquisition of assets.
Asset finance provides an affordable, secure line of credit
– so that companies can invest in tangible assets from
office equipment to manufacturing plant, from cars to a
fleet of aircraft.
It is the third most common source of finance for
businesses, after bank overdrafts and loans.

5. Why use Asset Finance?
Flexible
Easier Budgeting
• It can be used to fund almost any asset
• Payment terms and profiles can be tailored to meet cash flow
• Allows for equipment upgrades
• Can include hardware, software, training, installation and
support services
• Can be adapted to the business’s financial circumstances, for
example in the tourism sector, where work is very seasonal,
payment patterns can be set up to reflect this
• Makes budgeting and forecasting easy with fixed payments
• Payments are not subject to fluctuations in interest rates
• The real cost of acquisition reduces as inflation rises
• Fixed payments allow improved cash flow management
• This is never more important than in an uncertain economic
climate

6. Tax Efficient
Maximise Budget
Conserve Working Capital
Convenient
• Leasing is Tax deductible, reducing the net cost of obtaining
the equipment*
* For further information surrounding taxation, please
consult your Accountant
• Get what you want, when you want it, spreading the cost to
make your budget work harder
• Helps reduce initial outlay
• Allows your capital to be invested in other areas
• Easily manages supplier payment terms
• Payments made via Direct Debit, removing the need to
settle invoices
• Asset finance is less risky than an outright purchase, as the
lender takes on the risks of ownership

7. What is the difference between hard and
soft assets?
It is easily recognisable and identifiable – e.g. vehicles, construction
plant and machinery, engineering machinery, etc;
A “hard asset” is any asset that satisfies ALL the
following:
Soft Assets are smaller, lower-value items which either are worth less to begin
with or that depreciate quickly. For example, IT hardware or furniture.
There is an established resale market open to the finance company,
in which they could reasonably hope to recover a significant
proportion of the outstanding debt.
It can be readily repossessed, either by the finance company or by
another acting on their behalf;
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What are the differences between Regulated
and Non-Regulated Agreements?
An agreement is regulated by the Consumer Credit
Act 1974 (and ancillary legislation) if:-
• You are a Private Individual and the deal value is £60,260.00 or less.
• A lease or hire purchase agreement for a sole trader or small partnership (3 or
less partners) is regulated if the total payable (inc.VAT) is £25,000.00 or under.
• Any agreement for a limited company, limited liability partnership, or
partnership with more than 3 partners, amongst others. Total payable (inc.
VAT) is £25,000.00 or under.
• An agreement for a sole trader or small partnership (3 or less partners)
where the lend is over £25,000.00
The agreement is Non-regulated for:

8. What assets can be financed?
Most assets can be financed, including, but are not
limited to:
• Air Conditioning
• Amusement & Gaming
• Audio Visual
• Barware
• Beauty Equipment
• Beverage
• Buffet Display
• Cooking
• Epos & Cash Handling
• Fabrication & Storage
• Food Handling
• Food Preparation
• Food Service
• Furniture, Fixtures & Fittings
• Gym Equipment
• Information Technology
• Laundry
• Lighting
• Refrigeration
• Refurbishments
• Security Systems
• Soft Play
• Software
• Telecommunications
• Vending
• Warewashing
• Waste Management

9. Chapter 2
Types of
Asset
Finance

10. The main types of Asset Finance
are Hire Purchase and Leasing,
with 2 types of lease - Finance
Lease and Operating Lease.
This guide will be broken down and focus on
the following:
A lease is a contract between the finance company - known as the lessor, and
you - known as the lessee.
The lessor purchases the asset from the supplier and then permits the lessee
to hire the asset from the lessor in return for payment of rentals over a
predetermined period for its use.
During the life of the lease the asset remains on your business’ balance sheet
and rental payments pass through the profit & loss account.
For the life of the agreement, you are responsible for maintaining and
insuring the asset together with other terms and conditions. The finance
company may be able to repossess the goods if you fall behind with
payments. You should read the terms of the lease carefully before entering
into the agreement.
• Finance lease;
• Operating Lease;
• Hire Purchase;
What is a Lease?

11. What is a Finance Lease?
This facility transfers substantially all the rights and obligations of ownership to
the lessor for a period of time roughly equivalent to the useful life of the asset.
The rentals are structured so as to ensure at least the entire capital cost of the
asset is repaid to the finance company through the initial term.
The key features of a finance lease are:
You have an obligation to repay all these rentals, sometimes including a balloon
payment at the end of the contract. Once these have all been paid, the finance
company will have recovered its investment in the asset.
At the end of the period, you must return the asset to the finance company. In
certain circumstances, some forms of Finance Lease provide for a period of hire to
the lessor after expiry of the primary period known as the “secondary term”. These
are known as Minimum Term agreements (see below).
• The finance company purchases the goods;
• The funding is secured against the equipment being financed;
• You repay the finance company over an agreed term;
• You pay VAT on each rental payment
What are the different Finance Lease types?
The two basic forms of Finance Lease offered by finance companies are as
follows: -
At the end of the minimum term, the customer has the option of terminating
& handing back the asset to WOUK or continuing with the hire of the asset
into a secondary period in return for a reduced or less frequent rental.
Minimum Term
Rather than the ability for a lease to continue into a secondary period, in a fixed
term lease the lease expires at the end of the term. The finance company owns the
equipment. It cannot be sold to client, but it can be sold to a third party.
Fixed Term

12. The customer does not own the asset at the end of the term
(either primary or secondary).
This varies depending on whether the lease is fixed term or minimum term.
The following are possible options:
Who owns the asset?
What happens at the end of the lease?
• Your business, acting on behalf of the finance company, sells the asset to a third
party;
• The asset is returned to the finance company to be sold;
• Your business enters into a secondary lease period with the finance company
What are the benefits of a Finance Lease?
• The finance is secured against the equipment;
• It is available on nearly all equipment purchases;
• The finance spreads the cost of the purchase as many assets can be expensive
to pay in a lump sum;
• The VAT is spread so therefore not payable up front;
• It is a tax efficient funding method;

13. An Operating Lease runs for less
than useful life of the asset, and
the finance company does not
seek to recover the entire capital
value attributable to the asset
through the period of the lease.
Instead, the finance company ascribes a
residual value to the asset which it recoups
on onward sale at the end of the agreement.
The lessor retains the risk associated with
the residual value of the asset at the end
of the lease. This type of lease is frequently
used when the asset is likely to have a resale
value, as is the case with, for example,
aircraft and vehicles. The client gets the
use of the asset, sometimes along with
the provision of other ancillary services
(maintenance etc).
What is an Operating Lease?

14. Operating Leases are also a popular option for
schools and colleges as a means of supporting on-
going equipment investment. An Operating Lease is
the only type of lease that local authority-controlled
schools and academies are permitted to use. Other
options, such as finance lease or a hire purchase are
generally not permitted without prior approval from
relevant authorities.
A common form of operating lease in motor
finance is contract hire and is frequently
used in the hire of vehicle fleets.
A true Operating Lease has several distinctive
features:
On an Operating Lease you will only finance a percentage of the total
cost of the equipment over the term of the lease, as the agreement
will build in a Residual Value (RV)
The documentation (Operating Lease) may not state the value of this
RV, however, your provider may issue this upon request
The ownership of the asset will remain with the finance company and
there should be no option for the lessee to obtain ownership of the
asset at the end of the agreement
Do not use leasing (of any type) if you are unable to return the asset. The
documentation should include ‘Return Conditions’ which details how the
equipment should be returned
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15. The finance company retains ownership of the asset until such option is
exercised. Whilst you are still making payments, you are not allowed to sell or
dispose of the goods without the lender’s permission. The lender will be able to
repossess the goods if your business falls behind with payments.
The key features of an HP agreement are:
At the end of the agreement you will be given the option to acquire the asset upon
payment of an option to purchase fee. Alternatively, the asset can be returned to
the finance company at the end of the term.
Finance companies will disclose all fees and charges in the terms and conditions of
the Hire Purchase agreement. This will be provided in the documents that you sign.
• The lender purchases the asset;
• The funding is secured against the asset;
• You repay the finance company over an agreed term;
• You will typically pay all the VAT up front;
Hire Purchase (HP) agreements differ from
lease agreements in that the customer is
expressly offered an option to purchase the
asset at the end of the term.
What is a Hire
Purchase Agreement?

16. What are the benefits of a Hire
Purchase agreement?
What happens at the end of
the agreement?
• The funding is secured against the equipment;
• Available on nearly all equipment purchases;
• Spreads the cost of the purchase;
• The possibility of ownership of the goods at the end of the
agreement;
There are several ways to conclude a Hire Purchase
Agreement:
Early Settlement – You can settle a Hire Purchase agreement at any point
in the agreement by paying the outstanding balance and the Option to
Purchase fee to the lender. There may be a charge for settling the agreement
early. This would result in the client owning the asset. Different funders have
different terms.
End of Agreement / Contract - At the natural expiry of a Hire Purchase
contract, once all the contractual payments have been made, you can
either pay the Option to Purchase fee and take legal title to the asset, or
alternatively, you choose not to pay this fee and simply return the equipment
to the finance company authorities.

17. Refinance
This is an alternative form of Asset finance that enables businesses
who may have capital tied up in existing assets they already own to
release this capital by way of selling the asset to a finance company
where the company then leases the asset back to the business. This
is commonly known as a “Sale & Hire Purchase Back” or
“Sale & Leaseback” transaction.
Typically, this is available
over a similar period to
Lease or Hire Purchase
transactions, depending
on the age of the
underlying asset...
As most equipment falls in value quickly, most finance
companies will only offer refinance if the equipment holds
its value e.g. hard assets.

18. Chapter 3
Choosing
the right
type of
Asset
Finance

19. Making the right decision on which finance
product you choose to use for asset
purchase is incredibly important.
The table below is a simple guide to each
product; however, we always recommend
that you discuss your expenditure plans with
an accountant or other relevant adviser.
* Please seek specialist advice on VAT and tax relating to your business
Frequently asked questions Finance Lease Hire Purchase Commercial Loan
Will I be able to own the asset? Potentially Yes Yes
Are rentals tax deductible? Interest Only Interest Only Interest Only
Can I claim Capital or Annual
Investments Allowance?
No Yes Yes
Does this route preserve capital? Yes Yes Yes
Can I have a fixed term agreement? Yes Yes N/A
Do I need to pay the VAT Upfront? No Yes N/A
Is the asset off balance sheet? No No No
Can VAT on payments be reclaimed? Yes No N/A
Do I have to insure the assets under the
agreement?
Yes Yes No
Can VAT on the cost of the asset be
reclaimed?
No Yes Yes

20. Chapter 4
FAQs

21. What finance options are available to you?
The most popular asset finance products for smaller businesses are
Finance Lease and Hire Purchase agreements.
How flexible can asset finance be?
All of our finance solutions can be tailored to meet multiple
supplier purchases and payment terms. On a case by case basis
repayments can be structured to meet seasonal trading by
adjusting repayment amounts.
Our finance can be tailored to your needs - we just need to
understand what these are and why.
What can asset finance be used for?
Suitable for a large selection of asset types, finance is available on
purchases from £1,000 to several million pounds in value, covering
anything from IT Hardware & Software, Lighting, Catering, and
Plant & Machinery Equipment through to installation, support,
maintenance and training.
Put simply, if it’s integral to the running or operation of a business,
we have a solution that fits.
Why would I not use cash?
Capital is a valuable asset itself in a business. By using asset fi-
nance, you can acquire the assets you need, achieve potential
tax incentives and have little impact on cash flow as
well as accelerating the return on investment quickly.
Asset finance allows you to hold onto your valuable capital and
invest it in other areas of your business.
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22. Isn’t my bank the best source of finance?
Whilst bank finance plays an important role in business growth, access to
finance remains an area of difficulty for some businesses. Additionally, the
variety of available facilities may not always match that of White Oak UK.
With businesses looking for rapid solutions, many businesses like yours are
now looking to facilities provided outside of traditional banking options.
Does business trading performance limit
options to finance?
We pride ourselves on providing access to finance for all business stages
and performance, whether a new start, well established, small or large
company.
Ultimately our aim is to provide finance by simply matching the risk vs.
return on capital, this way we maintain excellent acceptance rates and
help more and more businesses to grow rather than turning them away.
How long does it take to arrange asset finance?
The main driving factor behind this is the amount of finance being applied
for. Our internal systems enable us to process applications incredibly
efficiently. Typically, asset finance of below £50,000.00 will take less than 24
working hours for a credit decision.
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23. If I use asset finance, do I need to insure the assets?
Yes; as soon as you take delivery of the assets you are obliged
under the terms of the agreement to insure it against loss or
damage. With all our agreements you will be asked to provide
details of your insurance policy and should you not have
insurance, this will be set up for you by our nominated third-party
insurance provider who will contact you by post.
Will we need to provide additional security?
An element of comfort is taken in the asset dependent upon
the depreciation levels the asset holds against the lifetime of the
agreement. Alongside this, we may ask for a guarantee if the
amount of borrowing is considerable and your balance sheet is
developing or growing.
Can I make changes to my agreement
during the term?
Yes; being flexible is one of the key benefits of asset finance as
we understand that you may wish to upgrade your assets or
add additional assets to your business. Typically, we allow for
upgrades or additional assets to be added to a new agreement
when 50% of the original agreement term has passed or where
system mandatory upgrades are needed. Please note that
upgrades are subject to credit and underwriting.
How can I discuss finance or obtain a quotation?
You can obtain information about how asset finance can help
you by speaking with us directly. We can provide you with
a quotation or alternatively, you can learn more about our
facilities via our website at www.whiteoakuk.com
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24. Why Choose
White Oak UK?

25. At White Oak UK we make asset finance easy
and uncomplicated for our customers. And our
customers have used asset finance for everything
from computers to bubble cannons.
Whatever your industry and whatever you want to
achieve; asset finance from White Oak UK helps
your business obtain the equipment it needs,
when it needs it.
We’ve been helping people make
money work for their businesses for
over 30 years. As one of the UK’s
largest independent provider of finance
solutions for smaller business, we
deliver excellence to our customers
through our high levels of service and
our no-nonsense approach to funding.
As both a funder and a broker, we are
able to deliver the most appropriate
funding solutions available.
As business loan specialists our aim is
to maintain consistently high levels of
service for our customers and partners
through technology and a personable
approach.
We’ve eliminated red tape from our
own business, and we pass the benefits
on to you. You’ll always speak to the
same person, who will get to know you
and your needs. And, because we’re not
burdened by unnecessary paperwork
or processes, we’re able to treat you
as an intelligent human being. Not
just a tick box on a form. That’s why
White Oak UK brings money into your
business, not bureaucracy.
We’re very proud
of our 4.9 star
rating, reflecting
our commitment to
service and customer
satisfaction.

26. White Oak UK is a trading style of LDF Operations Limited (Reg No: 02029122), LDF Finance No.1 Limited (Reg No: 04893877), LDF Finance No.2 Limited (Reg No: 08822802) and LDF Finance No.3 Limited (Reg No: 08822799),
incorporated in England & Wales and having Registered Office at Dee House, St David’s Park, Ewloe, Flintshire, CH5 3XF. LDF Ops Limited (Reg No: SC198910), incorporated in Scotland and having its Registered Office at Sixth
Floor, 58 Waterloo Street, Glasgow, G2 7DA. Authorised and regulated by the Financial Conduct Authority for credit-related regulated activities (including hiring).
CONTACT
White Oak UK
0371 705 2065
www.whiteoakuk.com