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.

Covid-19

Coronavirus emergency loan schemes extended

18 Dec 2020

Chancellor Rishi Sunak plans to extend the government-guaranteed emergency loan schemes and furlough scheme to provide further financial help to UK businesses impacted by the pandemic.

On Thursday 17 December, Chancellor Rishi Sunak confirmed plans to extend the UK’s £68bn coronavirus emergency loan schemes to the end of March. The programme was due to end in January.

It includes the £43.5bn Coronavirus Bounce Back Loan Scheme (BBLS) and the £19.6bn Coronavirus Business Interruption Loan Scheme (CBILS), both of which are designed to help SMEs mitigate the impact of COVID-19.

In addition, the £5bn Coronavirus Large Business Interruption Loan Scheme (CLBILS) is being extended to the end of March and the furlough scheme, which pays 80 per cent of furloughed staff’s wages, is being extended by a month until the end of April.

The government is also planning a long-term successor to the three business support schemes. This is expected to be delayed until after March.

The Funding Options team is here for your business during the pandemic and beyond.

As well as partnering with 40+ CBILS loan providers, we work with 100s of lenders providing a vast selection of alternative finance products.

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Simon Cureton

Chief Executive Officer

Simon has been Chief Executive Officer at Funding Options since 2019, spearheading its transformation into a leading fintech with the launch of its Funding Cloud platform. Simon has over 27 years of experience in financial services, having held senior posts at some of the biggest players in the industry all over the world.

How to secure business finance How can businesses prepare for the summer reopening?Funding for businesses experiencing supply chain problems and delays Flexibility and funding for businesses in winter economy plan Can I apply for a second CBILS loan?3 practical tips for businesses reopening on 12 April Chancellor outlines support for large businesses affected by COVID-19 UK Government pledges £1.25bn to support startups driving innovation How to look after your mental health while working from home Chancellor Rishi Sunak reveals £30bn plan to save UK jobs Find out about debt restructuring during Coronavirus Covid-19: Financial help for small businesses in the UK

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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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Coronavirus emergency loan schemes extended

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