What is a finance lease?

A finance lease is a type of commercial lease in which the legal owner of the asset — in this case, a tractor — rents the asset to the user of the tractor for an agreed-upon period. When a lessee enters into this agreement, they have full operating control of the asset. They will have responsibility and assume the risks and rewards that come with owning the asset. For accounting purposes, the lease gives the lessee the same economic characteristics as if they had full ownership of the tractor. The lessee will record the asset as a fixed asset on their balance sheet. In this situation, the lessee will record the interest of the lease payment as an expense. The lesser charges rent in exchange for lending the asset. The lessor retains ownership of the asset but the lessee gains exclusive use of the asset (providing they abide by the terms of the lease). The lessee is obliged to make rental payments that cover the original cost of the asset. There is an obligation to pay all of the fixed rental amounts, sometimes including a percentage of the purchase price of the vehicle at the end of the contract.

What is an operating lease?

An operating lease in contrast is the simplest form of equipment leasing, where the customer doesn't take on the risks and rewards that come with owning the asset (such as maintenance costs). An operating lease or contract hire is a way of renting an asset for your business over a short or medium time frame without taking on any risk. With an operating lease, you can get a tractor hire over a fixed term, with lower monthly payments and without the commitment of ownership.

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Complete guide to finances & funding for small businesses

5 Oct 2021

Applying for business funding can be an exciting, yet sometimes overwhelming, step in the business journey for any entrepreneur or business founder. Whether it’s government grant schemes or [business loans](https://www.fundingoptions.com/knowledge/business-loans/), there are a lot of options out there in the lending market, and knowing how to navigate the options (and when) to access them is crucial for any SME.

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Are you a business owner looking looking to grow and need some extra capital to make it happen? Or could your business use a cashflow injection? Whatever the reason you're looking for finance, we are here to support you through your funding journey.

We've teamed up with Addition - the financial services team that supports small businesses by providing individually tailored financial support, according to their budget, needs and dreams - to combine our expertise and create the ultimate guide to securing small business funding.

Our guide walks business owners through the entire business funding journey and helps you navigate the different options available in the marketplace today. You can learn about the entirety of the business funding journey from: 1. Preparing your business accounts for funding approval 2. Understanding and navigating the application process 3. Choosing the right type of funding for your business needs 4. How to get the most out of your funding capital

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At Funding Options, we work directly with businesses and their trusted advisors to secure vital business finance. We combine our in-depth understanding of the business finance market with technology to find financial solutions that fit.

If you’re interested in benefiting from our service, join our advisory platform, Connect. In partnering with us, you can leverage our expertise and pass the benefits on to your clients.

As long as the amount your client requires finance is between £1000 up to £20M, we can help. We’ll compare over 120 lenders specialising in different types of finance, including funding that is designed for specific sectors of the economy.

Joe Morley

Head of Unsecured Lending

Joe has worked in the alternative lending space since 2015. During this time he has helped hundreds of SMEs access millions in essential funding ranging from long-term asset-backed lending to short-term unsecured revolving credit lines and beyond. In his role, Joe manages and supports a large team of Credit Finance specialists.

How to manage your clients’ cash flow with funding Build a digital future by adding funding to your advisory proposition Automate compliance so you can focus on profitable advisory work How to become a the trusted advisor to your clients Recovery and reform: The post Covid-19 lending landscape webinar How can your SME clients leverage alternative finance?The Recovery Loan Scheme vs. Alt-Fi products Alternative business finance options for your clients 21% of SMEs say their accountant is their go-to resource for business finance Supporting your clients through a 2021 recovery - webinar Supporting your clients with Funding Options: webinar overview Build a digital future by funding your advisory proposition

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Disclaimer: Funding Options helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. We are also able to make insurance introductions. Funding Options will receive a commission or finder’s fee for effecting such finance and insurance introductions.

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