Equity Release from Business Assets, What Are Your Options?

Your business may be sitting on significant value in property, equipment, or vehicles. Here is how to access that equity without selling the asset.

What Does Equity Release Mean in a Business Context?

In a business context, equity release means accessing the value locked in assets the business already owns. This could be property, machinery, vehicles, or the business premises itself.

It is not the same as residential equity release, which is a retirement product. Business asset equity release is a legitimate working capital or growth tool used by thousands of UK companies every year.

The principle is simple. You own something valuable. A lender advances you cash against that value. You continue using the asset whilst repaying the advance.

Property You Own Through the Business

If your limited company owns commercial property, the equity can be accessed via a commercial mortgage refinance or a second charge. If the property has increased in value since purchase, or if the mortgage has been paid down, there may be significant equity available.

Released funds can be used for any business purpose, including working capital, expansion, or acquiring additional assets. The process is similar to remortgaging a residential property but uses commercial lenders and valuers.

Sale and Leaseback

You sell an asset, typically a piece of equipment or a vehicle, to a finance company, who leases it back to you. You get the cash value of the asset immediately. You continue to use the asset and pay a monthly lease payment.

This works well for businesses with unencumbered equipment or vehicles that need working capital. The asset must be in good condition and have a clear market value.

Asset Refinance

Similar to sale and leaseback but the asset remains in your ownership and is used as security for a loan. The lender advances a percentage of the asset value, typically 70 to 80 per cent.

This is useful for machinery, commercial vehicles, and specialist equipment. The asset must be identifiable, have a resale market, and not already be subject to an existing finance agreement.

Releasing Equity from a High-Value Business

If you own a business with significant value, including goodwill and recurring revenue, it is sometimes possible to raise finance secured against that value. This is a specialist area and depends heavily on the business sector, profitability, and the lender's appetite.

Professional practices, care homes, and established service businesses with contracted revenue are the most common candidates for this type of facility.

Considerations Before Releasing Equity

What is the equity being used for? Can the business service the new debt comfortably? Is there a better-value product available?

A refinance can make sense for growth investment but should not be used to paper over a structural cash flow problem. If the underlying issue is not addressed, the refinance simply adds debt to an existing problem.

Wondering if there is equity in your business assets worth releasing? Talk to us.