Asset Finance for Commercial Solar: 2026 Guide

What asset finance is

Asset finance is a structured loan-and-lease product secured against the solar PV asset itself. You pay a fixed monthly amount over a 5-10 year term; at the end of the term you typically own the asset outright (hire-purchase) or have an option to buy it for a balloon amount (lease). The monthly payment is tax-deductible. The asset sits on your balance sheet from day 1 (hire-purchase) or moves to your balance sheet at end of term (operating lease).

Typical 2026 commercial solar asset finance terms

• Term: 5-10 years (most common: 7 years)
• APR: 6.5-8.2% for limited companies with strong covenants (May 2026 base rates)
• Deposit: typically 0-10% of system value
• Tax treatment: monthly payments fully deductible against trading profits
• End-of-term: ownership transfers (hire-purchase) or balloon buy-out 1-5% of original cost (operating lease)

Worked example: £200,000 commercial PV on 7-year hire-purchase

When asset finance wins over CAPEX

• You're cash-constrained or want to preserve working capital for higher-return uses
• You can finance at sub-9% APR (most commercial businesses can; check your bank first)
• You want net-positive cashflow from year 1 — asset finance hits that for most KMM commercial customers
• You want ownership but cannot tie up £200k+ today

When CAPEX wins over asset finance

• You have cash sitting at sub-2% deposit rates — better to convert that to a solar asset returning 12-22% IRR
• You want simpler accounting — no finance interest schedule, no balance-sheet complexity
• You want to claim the Annual Investment Allowance in year 1 (finance arrangements affect when and how the allowance can be claimed — check with your accountant)

Honest honest finance modelling on asset finance

KMM works with multiple FCA-regulated commercial finance brokers. Our standard introducer fee on a £200k asset finance arrangement is typically £2,500-£4,500, paid by the finance broker (not added to your monthly payment). We disclose the fee on every proposal alongside the comparable CAPEX route.

FAQs