Research / Market Reports
UK Asset Finance Market Report 2026
UK asset finance is one of the largest and most structurally sound forms of SME lending. The Finance and Leasing Association (FLA) reports consistently strong new business volumes, driven by business investment in equipment, vehicles, and technology. This report examines the 2026 asset finance landscape, including rate trends, the electric vehicle transition, technology finance demand, and the evolving lender market.
Key Findings
- iUK asset finance new business volumes exceeded £30 billion in the 12 months to March 2026
- iCommercial vehicle finance remains the largest asset category, but technology and automation equipment is the fastest growing
- iThe electric vehicle (EV) transition is creating both opportunity and complexity for fleet-asset finance lenders
- iAsset finance approval rates remain the highest of any SME finance category at approximately 72%
- iHire purchase remains the most popular product structure, but refinance and sale-and-leaseback are growing as businesses extract value from owned assets
- iFintech lenders offering faster automated underwriting are capturing growing share among sub-£100,000 deals
Market overview
Asset finance is used by an estimated 30-35% of UK businesses that externally finance any capital expenditure, making it one of the most widely used forms of external finance. Its structural resilience derives from the security of the underlying asset: unlike unsecured lending, lenders can recover the financed asset in default, which reduces risk and enables higher approval rates and lower rates than unsecured alternatives.
The Finance and Leasing Association, which represents the major asset finance providers, reports new business volumes exceeding £30 billion annually. Commercial vehicle finance - van and truck fleets, cars for business use, and specialist vehicles - accounts for the largest share of volume. Plant and machinery finance for manufacturing, construction, and agriculture is the second largest category.
Technology and automation equipment finance is the fastest-growing category in 2025-26, driven by investment in robotics, AI-enabled manufacturing equipment, ERP and CRM systems, and IT infrastructure. Lenders are adapting underwriting models to account for the rapid depreciation of some technology assets, which affects both maximum LTVs and term lengths.
£30 billion+
UK asset finance new business (12m to Mar 2026)
Source: Finance and Leasing Association
30-35%
Businesses using asset finance (of those financing capex)
Source: Finance and Leasing Association
~72%
Asset finance approval rate (est., prime applications)
Source: Spark Finance analysis
The EV transition and asset finance
The transition from internal combustion engine (ICE) to electric vehicles is having a complex impact on commercial vehicle asset finance. On the demand side, government policy requiring the phase-out of new petrol and diesel van sales by 2030 is driving fleet operators to replace vehicles earlier and investigate EV alternatives. On the supply side, lenders are grappling with residual value uncertainty for EVs - the key driver of operating lease pricing.
Most major asset finance lenders have developed EV-specific products, but residual value guarantees (RVGs) on commercial EVs remain more conservative than for equivalent ICE vehicles, reflecting genuine uncertainty about the used-EV market in 5-7 years. This means operating lease rates for EVs are not always as competitive as businesses expect compared to equivalent ICE costs.
Hire purchase, which transfers residual value risk to the borrower, is currently more readily available for commercial EVs than finance lease. The government's Plug-in Van Grant provides funding towards the cost of small and medium commercial EVs, which can be combined with asset finance.
Refinance and sale-and-leaseback
As interest rates have increased and working capital pressures have grown, businesses are increasingly looking at assets they own free and clear as a source of liquidity. Sale-and-leaseback - where a business sells an asset to a finance company and leases it back - allows businesses to extract the value of owned assets without losing use of them.
Asset refinance (borrowing against the value of existing, partly-owned assets) is similarly growing. For businesses that purchased equipment or vehicles outright, or that have paid down finance agreements significantly, refinance can unlock substantial liquidity. Approval rates for asset refinance are high where the asset is in good condition and marketable.
Methodology
This report draws on FLA new business data, Bank of England SME lending statistics, DVSA vehicle registration data, and Spark Finance's own broker panel application data. Market share estimates involve interpretation of published data. This report is updated annually.
Disclaimer: This report is produced by Spark Finance for informational purposes and does not constitute financial or investment advice. Spark Finance is a credit broker, not a lender. FCA Authorised, FRN 958123.