By John Jenkins, CEO, Haydock Finance Ltd
Mid-market businesses are operating in a capital environment defined by higher interest rates, tighter bank lending criteria and increased regulatory pressure on traditional balance sheet deployment. Against this backdrop, access to growth capital has become more selective, more expensive and, in many cases, more restrictive.
Yet while conventional lending has retrenched, asset finance has moved decisively into the spotlight. No longer viewed simply as a transactional funding tool, it has evolved into one of the most strategically efficient forms of growth capital available to mid-market firms.
A Structural Shift in Capital Allocation
The post-pandemic lending landscape has accelerated structural change within the UK’s funding ecosystem. Banks face ongoing capital adequacy pressures and heightened risk scrutiny, while private credit continues to expand into areas historically served by traditional lenders. For mid-market businesses, this shift has created a funding gap: appetite exists for growth, but conventional term debt is often constrained by covenant intensity, security requirements and lengthy credit processes.
Asset finance offers a fundamentally different model. Rather than relying primarily on historic balance sheet strength, it aligns funding to the productive value of specific assets. This creates a more dynamic form of capital, one that is directly linked to operational expansion.
For growing businesses investing in plant, machinery, transport fleets or technology infrastructure, this alignment is critical. Capital expenditure becomes structured, predictable and cash-flow efficient. Instead of deploying large upfront sums or stretching working capital facilities, firms can match repayment profiles to asset lifecycles, preserving liquidity for strategic priorities.
Capital Efficiency in a Higher-Rate World
In a higher interest rate environment, capital efficiency has become paramount. Mid-market CFOs are under pressure to optimise return on invested capital while maintaining resilience. Asset finance supports this by limiting balance sheet strain and avoiding unnecessary equity dilution.
Unlike unsecured borrowing, asset-backed structures provide risk mitigation through identifiable collateral. This enables lenders to price facilities more competitively relative to unsecured debt, even during periods of economic volatility. For borrowers, the result is a disciplined funding mechanism that supports expansion without compromising financial stability.
Moreover, asset finance can play a central role in balance sheet optimisation. Refinance structures allow businesses to unlock capital tied up in unencumbered assets, redeploying liquidity into acquisitions, product development or market entry strategies. In an environment where private equity and strategic buyers remain active, this flexibility can be a significant competitive advantage.
Supporting Productivity and Sector Growth
Beyond individual firms, asset finance contributes meaningfully to wider economic productivity. Mid-market companies account for a substantial proportion of UK employment and sector innovation. Their ability to invest in automation, energy efficiency, fleet modernisation and digital infrastructure directly influences national competitiveness.
From manufacturing to logistics and specialist services, the capacity to fund mission-critical assets quickly and pragmatically underpins growth. Importantly, asset finance structures are adaptable—capable of supporting both straightforward acquisitions and complex, multi-asset facilities that reflect modern operating models.
As supply chains reconfigure and sustainability targets tighten, businesses require funding partners who understand sector nuance and long-term asset performance. The emphasis is increasingly on underwriting expertise and risk discipline, rather than simply deploying capital.
The Evolution of Asset Finance as Strategic Capital
The most significant change in recent years has been perceptual. Asset finance is no longer viewed as secondary to traditional lending; it is increasingly a first-choice funding strategy. Boards and investors recognise that structured asset-backed facilities can deliver growth while maintaining prudent leverage ratios and covenant flexibility.
This maturation mirrors broader trends within alternative credit markets. Investors are drawn to asset-backed lending for its tangible security and risk-adjusted return profile. Borrowers benefit from speed, flexibility and alignment with operational needs. The convergence of these interests has elevated asset finance into a mainstream growth instrument.
For mid-market businesses navigating uncertainty yet pursuing opportunity, the question is no longer whether to use asset finance, but how strategically it can be deployed. When structured thoughtfully, it becomes more than a funding solution—it becomes a catalyst for scalable, sustainable expansion.
In today’s capital markets, smart growth is not solely about access to funding. It is about accessing the right type of capital. Increasingly, asset finance is proving to be exactly that.
