What Is Asset Financing?

Asset financing allows startups to acquire assets, such as machinery, equipment, vehicles, or technology, without paying the full purchase price upfront. Instead of using working capital or cash reserves, companies can secure financing arrangements to spread the cost of acquiring assets over time. In asset financing, the acquired asset typically serves as collateral for the financing arrangement. The lender provides funds to the startup, allowing it to acquire the asset immediately, while the business agrees to repay the borrowed amount over a specified period.