Hard, Soft & Green Assets: What They Mean for Your Asset Finance
- SHARE
When it comes to UK asset finance, knowing the type of asset you’re financing matters. Different categories, hard, soft, and green assets, affect interest rates, loan terms, and lender appetite. Here’s a guide to help you choose the right finance solution.
Hard Assets: Tangible, Durable, Valuable
What they are: Physical items with substantial resale value, think vehicles (cars, HGVs), industrial machinery, plant equipment, or heavy tools .
Why they matter:
- Usually, physical and tangible pieces of equipment which are easily identifiable with a serial/chassis number.
- Lenders consider them low-risk because they retain value and are easy to repossess.
- Large second-hand market with quick resale timeframes.
- You typically get lower interest rates, longer terms, and larger funding amounts.
- Ideal for industries relying on heavy plant, HGVs, or specialised machinery.
Soft Assets: Essential but Depreciating
What they are: Items that still support operations but depreciate more quickly, such as IT and telecommunications, catering equipment, office furniture, software, AV equipment, and POS systems.
Why they matter:
- Lenders view them as higher risk due to lower residual value and harder to repossess.
- Smaller second hand market with longer re-sale timeframes.
- Expect higher interest rates, shorter repayment terms, and stricter qualifying criteria.
- Still ideal for tech-driven businesses that rely on fast-moving or upgradeable tools.
- Can be intangible or harder to identify with no serial/chassis numbers pieces of equipment.
Green Assets: Sustainability in Finance
What they are: Assets that support environmental goals electric vehicles, energy-efficient machinery, renewable energy installations (e.g. solar panels), EV chargers (Bank of Scotland Business).
Why they matter:
- Many lenders offer discounted rates, such as 0.20–0.25% off standard asset finance terms (Lloyds Bank).
- Loans often come with preferential terms and longer repayment periods tailored to sustainability use (Lloyds Bank).
- Aligns with both business net-zero ambitions and regulatory incentives, like the Transition Finance Pilot push .
Rate & Term Comparison
| Asset Class | Collateral Risk | Interest Rate | Term Length | Lender Appetite |
|---|---|---|---|---|
| Hard | Low | Lowest | 1–10 years | High: common, mainstream lending |
| Soft | Medium–High | Moderate-High | 1–5 years | Selective: often specialist lenders |
| Green | Medium | Discounted | 5+ years (often) | Emerging: incentives available |
Why This Matters to Your Business
- Costs – Financing hard or green assets can save you thousands in interest compared to soft-asset loans.
- Cash flow – Longer tailored terms mean easier monthly budgeting.
- Approval – Hard/green assets tend to get quicker approvals and higher funding limits.
Ready to Finance? Here’s How Principal Business Finance Supports You
At Principal Business Finance Ltd, we specialise in supporting SMEs through the asset finance maze:
- Market access: Tap into our panel of 100+ UK lenders for every asset type.
- Tailored advice: We’ll help you select the best finance route HP, lease, green asset facility, or soft-asset line based on asset type and cash flow needs.
- Competitive terms: Using our broker relationships, we secure preferential rates, especially for hard and green assets.
- Fast delivery: We access broker-only channels to speed up approval and deliver funds quickly.
Final Takeaway
Identifying the asset class you’re financing isn’t just semantic it determines your borrowing terms, interest costs, and cash flow.
- Purchase heavy equipment or vehicles? Go for hard asset finance.
- Investing in tech, catering, IT, or office upgrades? Expect slightly higher cost with soft asset finance.
- Focusing on sustainability? Green asset finance offers both financial access and environmental benefits.
To finance your next asset smartly, talk to Principal Business Finance Ltd. We’ll ensure your funding strategy matches your asset, plans, and ambitions at competitive rates available. Contact us on 01604217998, email info@principalbusinessfinance.co.uk, or enquire here.
