5 min read
Not every business asset holds resale value the way machinery or vehicles do, but that does not mean the cost cannot be spread. Soft asset finance covers items such as computer systems, software, telephony, security and office equipment.
What it is
Soft assets are items with little or no meaningful resale value once installed or used, in contrast to hard assets like tractors or excavators. Because there is limited security value in the asset itself, funding decisions rely more heavily on the strength of the business, but the underlying finance structures, typically hire purchase or lease, work in much the same way.
This allows businesses to fund technology upgrades, security systems or software licences without a large upfront outlay, spreading the cost over a period that reflects the equipment's useful working life.
Who it suits
- Farms and businesses upgrading office IT, farm management software or telemetry systems
- Operations installing CCTV, security or access control systems across a site
- Businesses investing in precision agriculture technology, GPS guidance or data systems
- Companies wanting to preserve cash or an existing overdraft facility for other purposes
How it works
Because soft assets carry limited security value, the finance company places more weight on the trading history and covenant of the business than on the asset itself. Terms are typically set to reflect a realistic working life for the technology involved, which is often shorter than for hard machinery.
- Application assessed primarily on business strength rather than asset security
- Term set to reflect a realistic technology lifespan, often three to five years
- Structured as hire purchase or lease depending on the business's preference
- Can sometimes be bundled with installation, support or software licensing costs
Typical terms
| Term | Typical range |
|---|---|
| Term length | 24 to 60 months, reflecting typical technology lifespan |
| Deposit | Often minimal, depending on the business's profile |
| Payment frequency | Monthly or quarterly |
| End of agreement | As per hire purchase or lease structure chosen |
| Security | Limited value in the asset itself; assessment weighted towards business covenant |
Pros and trade-offs
Where it works well
- Spreads the cost of technology that would otherwise require upfront cash
- Keeps other credit lines free for working capital or asset purchases
- Can bundle installation, licensing and support costs into one agreement
- Term can be matched to a realistic technology refresh cycle
Trade-offs to weigh
- Approval relies more on business strength given the limited resale value of the asset
- Total cost may be higher relative to asset value than for hard asset finance
- Technology may become outdated before the agreement ends
Worked example
Worked example: farm office and security system upgrade
- Equipment cost
- £22,000 plus VAT, covering IT, software licences and CCTV
- Deposit
- None required
- Term
- 36 months
- Indicative monthly payment
- Approximately £680
- Scope
- Includes installation and first-year support package
These figures are illustrative only, based on an assumed rate, and are not a quotation.
If you are planning a technology or systems upgrade, we can look at whether soft asset finance would suit your business.
Next step
Talk through the numbers with us
Send us the details of the asset and we will come back with an indicative figure and a properly structured option from the funder panel. No obligation, and no pressure to proceed.