When using Asset Finance, start by considering the type of assets you’re looking to acquire or refinance. Assets fall into two categories: hard assets and soft assets. Identify which category your asset belongs to before applying for finance. Whether you're investing in new equipment or upgrading your tech, knowing the difference between hard and soft assets is key. Most lenders are happy to fund against hard assets like vehicles or machinery. Securing finance for soft assets, like software or office furniture, can be more difficult. Understanding your asset type helps you choose the right lender and could improve your chances of approval.
Hard Assets
Hard assets are tangible items that hold significant value and are essential for business operations. They offer strong security for lenders, as they retain value over time and are easier to sell if the borrower doesn’t repay their loan. Hard assets are considered particularly valuable because they can be used to produce or transport other goods or services.
Hard assets include:
- Vehicles (cars, trucks, buses, coaches, tractors and vans)
- Yellow plant machinery
- Engineering machinery
- Manufacturing equipment
- Agricultural & Forestry equipment
Soft Assets
Soft assets are often harder to finance because they offer less security than hard assets. They usually have a lower value and may depreciate quickly over the finance term. Some soft assets may hold little or no resale value at the end of the agreement. Soft assets can be tangible or intangible, meaning some can be physically touched, like a computer, while others, like software, cannot.
Examples of soft assets include:
- Computer hardware and software
- Office furniture (chairs, desks, printers)
- Electronics
- Telecoms equipment EPOS systems
- Audio-visual equipment
- Shop fit-outs
Example of hard & soft asset finance agreements
Hard asset finance agreement example: A construction firm acquires an excavator through a Hire Purchase agreement.
Soft asset finance agreement example: A marketing agency wants finance for a new office fit-out, which may be harder to secure without additional security.
Main difference between hard and soft assets
The main difference between hard and soft assets is their value over time, tangibility, and ease of financing. Hard assets are tangible items like vehicles, machinery, and plant equipment. They hold their value over a longer period of time and offer strong security for lenders. Lenders find hard assets easier to resell if the borrower defaults. Soft assets include items like software, office furniture, and electronic equipment. They often depreciate faster and hold less resale value than hard assets. Some soft assets are intangible, which makes them harder to recover if needed. As a result, soft assets can be more difficult to finance. Due to the lack of security in soft assets, when it comes to financing them, the interest rate may be higher than if you were to finance a hard asset.
| Feature | Hard Assets | Soft Assets |
| Tangibility | Tangible | Tangible or Intangible |
| Value Retention | High | Low to Medium |
| Financing Difficulty | Easier | Harder |
| Examples | Machinery, Vehicles, Plant Equipment | Software, Office Furniture, Kitchen Fit-outs |
Get started with Asset Finance today
At Time Finance, we can help finance both hard and soft assets using our Asset Finance solutions. We work with Asset Finance brokers across the UK to help businesses acquire the assets they need to grow. We help brokers provide SMEs with Hire Purchase, Finance Lease, Sale & HP back and Refinance agreements. To learn more about Asset Financing or inquire about an existing proposal, contact our Broker Managers today.