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Business finance to buy equipment

Equipment finance lets you buy machinery, kitchen kit, specialist tools, IT or production equipment without using up working capital. In the UK this is almost always done through asset finance — usually hire purchase, where you own the asset at the end, or a finance lease, where you rent it across its useful life. Lenders underwrite both the business and the asset, so a strong asset (resaleable, identifiable, common in their book) often outweighs a thinner trading history. Lendrly maps which UK asset finance providers cover which equipment types and sizes, so you can shortlist the ones likely to look at your case.

Why this use case matters

Spreading the cost of capital equipment across its useful life is normal practice for UK SMEs. The alternative — paying cash up front — locks working capital into an asset that depreciates immediately and limits the business's ability to respond to other opportunities. For VAT-registered businesses, hire purchase also lets you reclaim VAT on the asset up front while spreading the repayments.

Asset finance underwriting weighs the asset itself, not only the business. Lenders are more flexible with younger SMEs when the equipment is mainstream, identifiable and easy to resell — vehicles, CNC machines, commercial kitchen kit, dental chairs, agricultural machinery. Bespoke or fast-depreciating tech can be harder to fund and may push the deal towards a higher deposit or a shorter term.

Finance types that usually fit

Based on how UK lenders typically underwrite this use case, the following finance categories are the most common fit:

ASS

Asset Finance

Finance to buy/refinance equipment, vehicles or machinery.

Eligibility map
UNS

Unsecured Business Loan

Term loan or credit line repaid through fixed instalments.

Eligibility map

Finance types that usually don't fit

These categories are mentioned for completeness but typically aren't appropriate for this use case:

Eligibility questions UK lenders typically ask

  • Is the asset identifiable, vendor-supplied and used primarily for the business?
  • Can you provide a vendor invoice or quotation for the specific item?
  • Is the asset's useful life equal to or greater than the proposed finance term?
  • Does the business have 6+ months of trading and a UK bank account?
  • Is the asset cost in line with the business's monthly revenue?
  • Are you comfortable with a personal guarantee from one or more directors?

Documents to prepare

  • Supplier or vendor invoice/quotation for the asset
  • Latest filed accounts or management accounts
  • Last 3–6 months of business bank statements
  • Director ID and proof of address
  • Existing finance schedules if the business already has asset commitments
  • Insurance details once finance is agreed

UK lenders that often look at this use case

The lenders below publish criteria consistent with this use case. Final approval is always subject to lender underwriting.

Frequently asked questions

Hire purchase or lease — which is better for equipment?
Hire purchase suits assets you want to keep, like a CNC machine, van or commercial oven. Lease suits assets you replace often, like IT or specialist medical kit. Tax treatment differs: hire purchase lets you claim capital allowances, while lease payments are generally allowable as an expense. A short conversation with your accountant is usually worth it before signing.
Can I finance second-hand equipment?
Yes, most asset finance lenders will fund used equipment, but term length is often limited by the asset's remaining useful life. Some specialist lenders prefer assets under 5 years old; others will look at older plant if values can be evidenced via a valuer or auction record.
What deposit will an asset finance lender want?
Typically 10–20% on new equipment for an established business. Higher deposits (20–30%) are common for younger businesses, specialist or high-depreciation assets, or where the director's credit history is mixed.
Can I use an unsecured business loan instead of asset finance?
Sometimes. Smaller or fast-moving asset needs are sometimes cleaner via an unsecured loan — no asset paperwork, faster funding. But asset finance is usually cheaper for larger items and protects working capital, because the asset itself acts as security.
What happens at the end of an asset finance agreement?
On hire purchase, you pay a final option-to-purchase fee and own the asset outright. On a finance lease, you typically continue paying a small secondary rental or return the asset. Operating leases are common for IT and similar where return is expected.

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