Comparison · Asset finance vs Green loan

Asset finance vs green loan — UK commercial solar 2026

Asset finance and green loan both let you spread the cost of commercial solar over 5-10 years while preserving FYA tax allowance capture. They differ on speed of decision (asset finance much faster), rate (green loan typically lower), and underwriting flexibility (asset finance more flexible). The right choice depends on time pressure and credit position.

Headline answer

Asset finance wins on speed (24-72 hour decisions vs 4-8 weeks). Green loan wins on rate (typically 1-1.5 percentage points lower APR). For year-end FYA-capture pressure projects: asset finance. For optimising lifetime cost: green loan.

Side-by-side

CriterionAsset finance (HP/finance lease)Green loan
Typical APR7-9% APR6.5-8.5% APR
Decision speed24-72 hours indicative; 7-10 days credit committee4-8 weeks for established customers
Term3-7 years typical5-10 years typical
Underwriting flexibilityHigher — accepts wider credit profilesStricter — typically requires established trading position
SecurityAsset itself (solar PV)Asset + sometimes additional security/PG
FYA captureYes (HP transfers title progressively)Yes (borrower retains title)
Min ticket£20-25k+£100k+ typical, sometimes £50k
Best forSpeed-critical or smaller-ticket projectsLower-rate optimisation; larger projects

Which one for which situation

  1. Is there year-end FYA-capture pressure or a deadline?

    If yes (accounting year-end approaching, FYA deadline pressure, supplier discount window), asset finance's 24-72 hour indicative decisions and 7-10 day full credit can be the difference between hitting the deadline and missing it. The 1-1.5pp APR premium is worth it for speed.

  2. Is the project under £100k?

    For smaller projects, green loan minimum tickets often don't apply or rates aren't competitive. Asset finance better fits the scale economics. Most asset finance lenders accept tickets from £20k.

  3. Is your credit position uncomplicated and time uncritical?

    For established trading companies with clean credit and no time pressure, green loan optimises rate. The 4-8 week timeline is manageable and the rate saving over 5-7 years is meaningful (£8-15k on a £200k facility).

  4. Do you have an existing asset finance relationship?

    If you already have a vehicle, equipment, or plant asset finance facility, adding solar to that facility is often the fastest, simplest route — no new lender vetting, established credit relationship, sometimes pricing concession. Worth checking with your existing asset finance broker before opening a new green loan process.

Asset finance (HP/finance lease) vs Green loan FAQs

Why is asset finance faster than green loan?
Different underwriting models. Asset finance lenders typically run automated credit decisioning on standard-credit applications using third-party credit scoring + accounts review. Green loan lenders typically run human-led credit committee processes with deeper due diligence. The asset itself (solar PV) provides the security in both cases, but mainstream green-lending processes include broader sustainability and ESG diligence that adds time.
Can I have both an asset finance facility and a green loan on different projects?
Yes — they're separate facilities and don't conflict structurally. Some businesses operate solar via green loan for the main installation and use asset finance for ancillary equipment (batteries, EV chargers, monitoring). Coordinate with your accountant on capital allowance claims to avoid double-counting.
Is hire purchase tax-deductible like green loan interest?
Yes — the interest portion of hire purchase payments is tax-deductible as an operating expense. The capital portion isn't (it's the asset cost being repaid). Hire purchase payments split into interest and capital each month, with the interest portion declining over the term as the principal reduces.
What are the typical fees on asset finance vs green loan?
Asset finance: arrangement fee 1-2% of facility, typically. Documentation fees minimal. Green loan: arrangement fee 1-2% of facility plus sometimes drawdown fees and ongoing facility fees. On larger facilities (£500k+), green loan total fees can be modestly higher than equivalent asset finance, though rate is typically lower.
Which is more common for UK commercial solar in 2026?
Green loan is more common for projects above £200k where established trading customers can access mainstream bank lending. Asset finance dominates the £20k-£200k range and the speed-critical / opportunistic deal segment. Both are well-developed UK product categories.

Asset finance (full page)

Hire purchase and finance lease structures for commercial solar.

Green loans (full page)

Specialist green-debt funding for commercial solar projects.

Asset finance lender shortlist

Five categories of UK asset finance lender with rates and decision speeds.

Need this comparison run on your specific numbers?

We model both structures side-by-side using your postcode, half-hourly demand profile, accounting position, and balance sheet preferences. Five working days from enquiry to indicative comparison.

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