What is Plant and Machinery Finance?
Heavy machinery is an expensive asset that’s crucial to businesses in a number of sectors. If you’re looking to acquire machinery for your business, you’ll find a range of financing options that allow you to buy or lease equipment without laying out a large sum of cash upfront. Payments on these arrangements are often tax deductible.
How Does Plant and Machinery Finance Work?
Here’s a quick overview:
Term and Repayment:
Plant and machinery finance solutions are designed by specialist lenders to fit the needs of manufacturing, agricultural and construction businesses. With terms of up to five years, these arrangements offer a repayment plan that allows you to spread the cost of buying or leasing equipment, including VAT, over a number of monthly payments. The rate is not usually affected by inflation or interest rises, meaning that your payments always remain the same.
Lender Requirements:
Lenders will carry out credit and security checks and will ask you to provide accounts and income statements for your business, usually over a number of years. Other documents that might be required include a balance sheet, a cash flow forecast and any major customer agreements.
What kind of plant and machinery finance is available?
Most UK lenders offer three main options for financing heavy machinery. The best one to choose will depend on your needs and preferences.
Hire Purchase:
Hire Purchase means that the lender purchases the equipment. The cost is then spread over a repayment plan that’s designed around your business’s budget and cash flow. Once you have paid off the total amount, you’ll be able to take ownership of the equipment in return for a nominal fee.
Operating Lease:
With an Operating Lease, you pay the lender for the use of the equipment over a fixed term. When the term ends, you can either continue renting the equipment, return it to the lender, or sell it on for a percentage of the proceeds.
Finance Lease:
Finance Lease arrangements offer a rental plan based on a predicted future residual value of the equipment. This means that payments are usually lower and the lender sells the equipment at the end of the lease period. At that point, you can terminate the arrangement, rent a replacement, or opt for an upgrade.
If you already have cash tied up in machinery, you may be able to refinance it to release some equity for your business. Assuming the equipment belongs to you outright, you can use it as security for a loan. The amount of the loan will be based on the lender’s valuation of your equipment.
What kind of equipment can I finance?
You’ll find financing available from specialist lenders for a wide range of machinery and equipment. Some of the most popular items include excavators, backhoes, cranes, graders, compactors, pavers, bulldozers and loaders.
Finance Your Plant and Machinery
Looking to fund construction plant or heavy machinery?
Submit your enquiry using the form below or contact our team directly to explore structured plant and machinery finance solutions.
At Wenham Specialist Finance, we help businesses spread the cost of essential equipment while protecting cash flow and supporting growth.