Machinery Finance

How machinery finance works

Most machinery is funded on hire purchase over three to seven years, with the machine itself as the security. You pay monthly, you own it at the end, and you claim the capital allowances on the full cost from the point it comes into use. A finance lease works differently and occasionally suits better — our asset finance explained page sets out the difference properly.

Because the asset holds value, terms on machinery are usually longer and rates lower than on equipment that depreciates fast. That is the practical meaning of a hard asset: a lender can identify it, value it and sell it. Machine tools, presses, moulding machines and production plant all sit firmly in that category. Software, tooling and control systems do not, which matters more than most buyers expect.

The part that catches people out: soft costs

A machinery quote is rarely just the machine. It carries delivery, rigging, installation, commissioning, tooling, software licences, training and sometimes a service contract. Lenders fund the machine. They will often fund only part of the rest, or none of it.

On a £180,000 quote where £30,000 is installation, tooling and software, you can find yourself needing to bridge that £30,000 in cash at exactly the moment you were trying to preserve it. It is entirely solvable — some lenders take a percentage of soft costs, and there are other ways to structure it — but only if it is raised before the order is placed. Send us the full quotation rather than the machine price, and we will tell you what is fundable before you commit.

Deposits, stage payments and imported machines

Machine builders commonly want a deposit at order and a stage payment before shipping, with the balance on delivery. Asset finance normally pays out on delivery and acceptance — so on a machine with a six-month build slot, there is a gap between what the supplier wants and when the funder pays.

Lenders can pay a supplier directly and some will stage payments against the build. Others will not. Getting this settled at the outset is the difference between a straightforward purchase and finding your own working capital tied up in a machine that has not arrived. If you are buying from a European or Asian builder, tell us early.

Used and second-hand machinery

Used machinery finance is completely normal and often the better buy — a well-maintained machine from a closing shop or a dealer’s refurbished stock can be a fraction of new for most of the capability. Lenders will fund it. What they want is provenance: serial number, age, hours where the machine records them, service history and a clear title from the seller. Auction purchases are fundable but move fast, so talk to us before the sale rather than after the hammer.

Releasing cash from machines you already own

If your shop floor is full of owned, unencumbered machines, that is capital sitting idle. Asset refinance raises cash against it without stopping production — commonly used to fund the deposit on the next machine, or to smooth a gap between a contract win and the investment it needs. There is more on that approach in how to scale a small business with asset finance.

What we fund across the sector

The machinery panel covers a wide spread. CNC machines and machine tools and woodworking machinery have their own pages. Beyond those we regularly fund fabrication and sheet metal plant, injection moulding, packaging and labelling lines, print machinery, food production equipment, compressors and dust extraction, conveyors and automation. For construction plant see plant and machinery finance; for farm kit see agricultural machinery.

Who you are actually dealing with

Search machinery financing and you will find a mix of banks, manufacturer schemes and independent machinery finance companies, each lending its own book. Machinery finance in the UK is a broad market and no single lender is good at all of it — the funder who is sharp on a new machining centre often has no appetite for a twenty-year-old moulder, and the one who will back manufacturing machinery for a three-year-old company is rarely the cheapest for an established one.

Whole-of-market machinery asset finance means the deal goes to whichever lender fits it, rather than to the one whose logo happens to be on the dealer’s brochure. We finance machinery from a single second-hand machine to a full production line, and if you are looking for finance for machinery of any age or type, that difference is usually worth more than the headline rate.

What to send us

The full supplier quotation, whether the machine is new or used, and roughly when you need it in place. If there is a contract or a piece of work driving the purchase, mention it — machinery bought against named work is a straightforward conversation. Use the machinery finance calculator for a rough monthly figure first if it helps. No credit check to ask.