Plant and machinery finance for UK construction, manufacturing and farming

Plant and machinery finance works by a lender paying for the machine and your company repaying it over an agreed term, with the machine acting as security. Lenders care about the asset as much as the business, so details about the machine shape the deal.

1. Specify the machine: make, model, age, hours or usage, serial number and the supplier's quote.
2. Lender reviews the asset: it estimates what the machine will be worth throughout the term. Well-known makes with a strong resale market are usually easier to fund.
3. Lender reviews your company: bank statements, accounts, existing commitments and credit checks once you decide to apply.
4. Structure is agreed: deposit, term, any balloon payment and the repayment profile, such as monthly or seasonal.
5. Paperwork and checks: you sign the agreement, and the lender may confirm delivery, inspect used machinery or check serial numbers.
6. Supplier is paid: the lender pays the supplier, and repayments start, usually monthly.

Lenders usually require the machine to be insured, with their interest noted on the policy. Plant that moves between sites may need extra security measures, depending on the lender.

The same finance types work across sectors, but lenders look at different things depending on the machine and how it earns money.

Construction plant

Excavators, dumpers, rollers, telehandlers and access platforms from established makes usually hold their value well, which lenders like. Lenders also look at the company's order book and whether income is lumpy. Our page on construction finance covers the wider funding picture.

Manufacturing machinery

CNC machines, presses, injection moulding equipment and packaging lines can be funded, though bespoke or built-in equipment can be harder because it is costly to remove and resell. Installation and commissioning costs may be funded by some lenders.

Agricultural machinery

Tractors, combines, sprayers and handlers are commonly funded. Some lenders offer seasonal or annual repayment profiles that match harvest income, which can help farming businesses with uneven cash flow.

The cost is the total you repay above the price of the machine. It is made up of the lender's finance charges plus fees, and is driven mostly by the machine's resale value, the term and your company's profile.

• Finance charges: interest or a rental charge built into the repayments.
• Deposit or advance rentals: lenders may ask for a deposit, often around 10% or more for used or specialist machinery. A bigger deposit reduces the amount financed.
• Documentation fee: usually charged at the start.
• Option-to-purchase fee: on hire purchase, a small fee at the end to transfer ownership.
• Balloon payment: a larger final payment that lowers monthly repayments but leaves a sum due at the end.
• VAT: on hire purchase, VAT on the full price is usually payable at the start, which a VAT-registered company can normally reclaim through its VAT return. On a lease, VAT is usually added to each rental.

Tax treatment differs between buying and leasing. With hire purchase, your company may be able to claim capital allowances; with a lease, rentals may be treated as a business expense. Check with your accountant before choosing.

Illustrative example only: actual costs depend on the lender and your circumstances.

A groundworks company buys a used excavator for £60,000 plus £12,000 VAT on hire purchase over 48 months.

• Deposit: £6,000 (10% of £60,000), plus the £12,000 VAT paid upfront and later reclaimed through the VAT return
• Amount financed: £54,000
• Finance charges over the term: £8,640
• Total repayable on the agreement: £62,640, or £1,305 a month for 48 months
• Documentation fee £250 and option-to-purchase fee £150
• Total cost of finance: £9,040 (£8,640 + £250 + £150)

If the excavator earns more than £1,305 a month in hire or productive work, it helps pay for itself. Try your own figures in our asset finance calculator.

The amount depends on the machine's value and the company's ability to repay. Lenders usually fund up to the purchase price, less any deposit, and look for repayments that sit comfortably within your cash flow.

For used machinery, lenders often limit how old the machine can be by the end of the term, so an older machine may get a shorter term rather than being refused. For larger fleets, a lender may agree an overall credit line that the company can draw on for several machines over time, subject to approval of each one.

Lenders also take account of finance the company already has, including other machines on hire purchase or lease. If existing repayments already take up much of the monthly cash flow, a lender may ask for a larger deposit, offer a longer term or fund a lower amount. Our guide on how much your company can borrow explains the checks lenders use.

The biggest risk is that the machine can be repossessed if repayments are missed, which could stop work on a contract. Check these points carefully:

• Personal guarantees: often requested for younger companies or used machinery. Read our guide to personal guarantees.
• Early settlement: for companies, the agreement sets the settlement figure, which may include some or all of the remaining charges.
• Balloon payments: make sure you can pay or refinance the final sum.
• Insurance and maintenance: your company remains responsible, even if the machine breaks down.
• Lease return conditions: leased machines may need to be returned in a set condition, with charges for excess wear or usage.

Which option fits best depends on whether you want to own the machine, how long you will keep it and whether you already own it.

• Business hire purchase: the most common route when you want to own the machine and keep it for most of its working life.
• Equipment leasing: suits machines you plan to replace regularly or would rather not own.
• Asset refinance: releases cash from machinery your company already owns outright.
• Plant hire: short-term hiring may cost less overall if you need a machine only occasionally, and the hire company handles servicing and breakdowns.

Sometimes. Because the machine is security, some lenders are more flexible than for unsecured lending, but each lender has its own criteria.

• Short trading history: minimum trading periods range from a few months to two or three years. A larger deposit or experienced directors can help.
• Adverse credit: older or explained issues may be accepted by some lenders, often with a bigger deposit.
• Low profits: strong bank statements and machines with good resale value may help.

Plant and machinery finance for limited companies, LLPs and partnerships of four or more partners is generally unregulated business finance. Consumer Credit Act protections generally do not apply, so your rights depend on the agreement.

Welcome Finance is not authorised or regulated by the FCA and arranges unregulated business finance only. Read the full terms and take independent advice if anything is unclear.

We match your machine and company with suitable lenders on our panel. Your dedicated relationship manager, a real person, supports you by phone, email and chat until the lender pays the supplier.

1. Check your eligibility in about 60 seconds, without affecting your credit score.
2. Share the machine details and supplier quote with your relationship manager.
3. We approach suitable lenders and explain the structures offered.
4. You decide whether to apply. The lender runs its own credit checks and, if approved, issues documents.
5. You sign, the supplier is paid and the machine goes to work.

We charge you no fee. We are paid a commission by the lender when your finance completes. You can ask how much we will receive, and commission can differ between lenders.

Can I finance attachments and tools with the machine?

Usually, if they are on the same supplier invoice. Small items on their own may fall below a lender's minimum.

Can I part-exchange an old machine?

Yes. The part-exchange value can act as your deposit, reducing the amount financed.

Can I settle a machine early and upgrade?

Often, yes. You pay the settlement figure, sometimes from the sale proceeds, then finance the new machine.

Does the machine need a valuation?

Lenders value most machines from the quote and market data. Older or specialist machines may need an inspection.

Can imported machinery be funded?

Some lenders fund imported machines, though deposits to overseas suppliers before delivery can be harder to finance.

What happens if the machine is stolen or written off?

Insurance normally pays the lender first. If it pays less than you owe, your company may need to cover the shortfall.

Can I add more machines to an existing agreement?

Each machine usually has its own agreement, but a lender with a good repayment record may approve extra ones more easily.

Can a farming partnership apply?

Yes, if it has four or more partners or is an LLP. Lenders may ask several partners to sign.