Reviewing an asset finance agreement

An asset finance agreement lends against equipment, vehicles or plant the business owns or is buying, with the lender taking security over the asset and a guarantee from the directors where it requires one. The lender's document sets covenants the business must keep for the term, events of default that let the lender call in the loan and take the asset, and a cross-default clause that links the agreement to every other facility the business has. I review the agreement from the borrower's side and return it marked up with a written explanation of what it commits the business and its directors to and the terms worth asking to change, for a fixed fee of £495 in three working days.

Who this is for

Companies, partnerships and sole traders in England and Wales taking finance secured on equipment, vehicles, plant or stock, from a bank, an asset finance house or a specialist lender, whether to buy new assets, to refinance assets they own or to release cash through a sale and leaseback. The borrower is a business; a sole trader or small partnership may have a regulated agreement.

What to look for in an asset finance agreement

The security: what it covers and how it is registered

The agreement will take a fixed charge or a chattel mortgage over the financed assets, and lender drafts extend it to replacements, additions, proceeds and sometimes to all the borrower's equipment. A charge created by a company must be registered at Companies House within the period set by section 859A of the Companies Act 2006 or it is void against a liquidator, administrator and creditors, and the lender will require the borrower to assist. The review checks that the security is limited to the financed assets, that it is released on repayment, and that it does not overlap with the security other lenders already hold.

Covenants: what you must do and must not do for the term

Asset finance agreements contain covenants to maintain and insure the assets, to keep them at stated premises, not to sell, lease or charge them, to supply accounts and information, and sometimes to maintain financial ratios. The review checks each covenant against the business's plans, asks for consent not to be unreasonably withheld where the borrower needs to move or replace assets, for financial covenants to be tested on defined accounts with a cure right, and for information obligations that the business can meet without a finance function.

Events of default and cross-default

The events of default decide how much control the lender has: non-payment, breach of covenant, a misrepresentation, insolvency, change of control, a material adverse change, and default under any other facility. The review asks for grace periods and materiality thresholds, for a material adverse change clause to be limited or removed, for cross-default to apply only to defaults above a stated amount that have been called, and for the lender's remedies on default to be proportionate, with notice before repossession of assets the business needs to trade.

Personal guarantees and the directors' exposure

Lenders require the directors to guarantee the borrower's obligations, and a guarantee must be in writing and signed to be enforceable under section 4 of the Statute of Frauds 1677. The review checks that the guarantee is capped at a stated amount, limited to this facility, released on repayment, and that it does not extend to future facilities or to the borrower's other liabilities to the lender; that the guarantors receive notice of default and the chance to remedy; and that a guarantor leaving the business can be released on the lender's reasonable terms.

Interest, fees, early repayment and the Consumer Credit Act

The agreement sets the rate, whether fixed or variable, the arrangement and documentation fees, and the cost of repaying early, which the review checks against the lender's real loss and the rule against penalties in Cavendish Square Holding BV v Makdessi [2015] UKSC 67. Where the borrower is a sole trader or a partnership of two or three partners, the agreement may be regulated by the Consumer Credit Act 1974 unless exempt as a business-purpose agreement above the Act's limit, and the review confirms the position and the protections that follow.

Sale and leaseback, title and the assets you thought you owned

In a sale and leaseback the business sells assets to the lender and leases them back, so property in the assets passes to the lender under section 17 of the Sale of Goods Act 1979 and the business becomes a hirer with the obligations of a lessee, including insurance, maintenance and return. The review checks the sale price against the assets' value, that the lease gives the business an option to buy the assets back at the end for a stated sum, that the lender warrants it will not deal with the assets during the term, and that the assets are free of other lenders' security before the sale, since a sale of charged assets without consent is a default under the other facility.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Complex review, £895. Heavily negotiated or unusually complex documents. Five working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

The lender wants a charge over all our equipment, not just what it is financing. Is that normal?

Lender drafts start there, and it leaves you with nothing to offer the next lender. The review asks for the security to be limited to the financed assets and their replacements, released on repayment, and for consent to be required before the lender takes further security.

I have been asked to give a personal guarantee. What should I look for?

A cap, a limit to this facility, release on repayment, notice of any default before the lender calls on you, and no extension to future borrowing. The review checks each and asks for the changes a lender will usually accept for a capped guarantee.

If we miss one payment, can the lender take everything?

Under lender drafts a missed payment is an event of default that lets the lender accelerate the loan and repossess the assets. The review asks for a grace period after notice, for cross-default to apply only to defaults above a threshold that have been called, and for proportionate remedies.

Related guidance and services

• Contract review, £495, the service this page describes
• Shareholders agreement, £995
• Reviewing an equipment lease or hire purchase agreement
• Reviewing a vehicle fleet lease

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.