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.

News

Funding Options wins Phase 2 of Nesta's Open Up Challenge

5 Dec 2018

Funding Options has been named a winner in the second phase of Nesta's Open Up Challenge, the prize designed to encourage innovation in fintech. Funding Options is one of only three companies to have won both stages of the challenge, having won Phase 1 back in December 2017.

Our founder and CEO, Conrad Ford, said:

“We’re delighted to be one of the winners of Nesta’s Open Up Challenge yet again. Every year millions of small businesses find themselves unable to access funding from the mainstream lenders and we exist to provide these firms somewhere to turn. In our entry, we showed how we can use Open Banking data to truly benefit small businesses by allowing them to quickly and easily compare and draw down a loan.

“Access to finance causes countless sleepless nights for the UK’s hard-working small business owners but at Funding Options we can use Open Banking data to make this process much less painful. This prize money will help us support thousands more businesses to achieve their goals and fulfil our mission to help small businesses walk tall.”

You can find out more in Finextra's coverage.

Courteney Way

Marketing Director

Courteney Way is the Marketing Director at Funding Options, raising the profile of the fast-growth fintech within the ecosystem and building brand awareness as a vital provider of finance solutions to SMEs. For the past ten years, she has worked across UK, European and South African markets and In 2022, she was recognised as part of Women in Fintech Powerlist.

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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.

*Eligibility criteria apply - see Tide website for full details.

Funding Options Ltd is incorporated and registered in England and Wales with company number 07739337 and registered office at 4th Floor The Featherstone Building, 66 City Road, London, EC1Y 2AL.

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Funding Options wins Phase 2 of Nesta's Open Up Challenge

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