What is the Difference Between Hard and Soft Asset Finance?

Before we get into the nitty gritty of finance, let’s start with the basics.

You may have heard the terms ‘soft assets’ and ‘hard assets’ being banded around, particularly in the construction industry, but you would be forgiven for not fully understanding the difference between the two. 

What is a soft asset?

In simple terms, a soft asset is something you use for your business, such as an item of IT equipment, programming software or even office furniture. It can be a vital part of your day to day running, but it will retain limited value after purchase, or could have no resale value whatsoever.

What is a hard asset?

A hard asset is something used within your business that tends to retain value during and after use. Hard assets do not depreciate quickly and are often a physical piece of equipment. This could be a company premises, a vehicle, or, in our case, plant machinery. Because they hold their value, they can be used as security to fund further purchases or sometimes used to refinance to free up finance cash or sold to generate cashflow. 

Examples of soft and hard assets in construction

Soft assets:

• Scaffolding 
• GPS systems for machinery 
• Estimating software
• CAD design programs
• Cloud storage subscriptions
• Training platforms 
• Office furniture
• Security systems 
• Telecom systems
• Scaffolding 
• GPS systems for machinery 

Hard assets:

• Excavators
• Dumpers
• Site cabins
• Forklifts
• Telehandlers
• Vehicles 
• Speed boats
• Helicotors 
• Concrete mixers
• Jumbo juets 

What sets soft and hard asset finance apart?

It largely comes down to the value and risk attached to the asset itself. Hard asset finance typically involves physical, long-lasting items like machinery, vehicles or plant, things that hold their value well and can often be resold if needed. These are seen as safer bets for lenders.

Soft asset finance, on the other hand, tends to cover things like IT systems, software, or office equipment, essential to running your business but with less resale value and a shorter lifespan. Because of this, soft assets are seen as a bit riskier to fund, and often need a more tailored approach to get over the line.

Securing asset finance to support your business

As advocates for the UK construction industry, we recognise that if your business is not cash rich, or even would prefer to hold cash in the bank, finding the funding for vital soft assets can prove challenging, especially through traditional lending routes. That is why we set out to help you spread the cost of your equipment, with soft asset finance. 

Whilst often seen as the poor relative to hard assets, having the right software, equipment and other systems in place to support your business to run efficiently is crucial to ensuring your business’s adaptability and growth.

That’s where we come in. Our carefully tailored asset finance options can support both soft and hard assets. We offer different options, including hire purchases, finance leases and personal contract purchases, which we can advise on depending on your end goal.

So whether you are looking to finance plant, a company vehicle or construction machinery for your next job, or you need to install an IT system to support the office, we can most likely make it happen.

And, as is the Rockthorn way, we like to take a personal approach. At Rockthorn, our finance team will discuss your needs directly to find you the best option for your business. With many years of experience in the industry, we are driven to achieve the very best outcome for every client. You are more than just a number on a spreadsheet or a list of checkboxes. 

Need finance that fits your business, not the other way around?

If you would like to chat, give us a call on 0330 118 5030 and we can discuss the best asset finance route for your business, depending on your goals.