Asset finance vs working capital finance

2 min read

A specific assetAsset finance

The cash cycleWorking capital

Diagnose the squeezeTo choose

What each is for

Asset finance funds one identifiable thing — a machine, van or piece of kit — and is secured on that asset. Working capital finance funds the operating cycle: the gap between paying for stock, wages and overheads and getting paid by customers. The two answer different questions. If your problem is 'I need this specific asset', asset finance fits. If your problem is 'I run short of cash between spending and earning', working capital finance fits. See our asset finance guide and working capital guide.

Diagnosing the squeeze

Symptom	Points to
Need a specific machine or vehicle	Asset finance
Cash gap before customers pay	Working capital finance
Seasonal cash swings	Working capital (revolving line)
A one-off large asset purchase	Asset finance (or a loan)

Sometimes both apply — you buy a machine (asset finance) and need cash to fund the extra work it brings in (working capital). Diagnosing which pressure is real tells you where to start.

Where a general loan spans both

An unsecured short-term business loan is flexible enough to do either job: buy an asset and cover the working capital around it, without a charge over your equipment. That flexibility is its advantage over asset finance's item-restriction. See asset finance vs a loan.

The Credicorp view

Credicorp provides short-term business loans and a flexible Credicorp Flex line for working capital — cash to spend across a need rather than a charge over one machine, lent to the company with no personal guarantee. If a single large asset is the whole purchase, a specialist asset financier may price it keenly. Register to apply. Educational content, not financial advice.

Frequently asked questions

What is the difference between asset finance and working capital finance?

Asset finance funds one specific item, such as a machine or vehicle, and is secured on it. Working capital finance funds your cash cycle — the gap between paying for stock and overheads and getting paid by customers. Choose asset finance for a specific asset and working capital finance for a recurring cash squeeze.

Can I need both at once?

Yes. Buying a machine (asset finance) can generate extra work that itself needs funding while you wait to be paid (working capital). Diagnosing which pressure is real, and whether both apply, tells you where to start and whether one facility or two makes more sense.

Can a business loan cover both?

Often, yes. An unsecured short-term business loan is flexible enough to buy an asset and cover the working capital around it, without placing a charge over your equipment. That flexibility is its edge over asset finance, which restricts the money to the specific item.