Can Engineering & Manufacturing Firms Refinance Equipment to Fund New Orders?

Short answer: Yes — many engineering and manufacturing businesses can refinance machinery and equipment to release cash for new orders. Typical routes include asset refinance, sale & leaseback, refinancing existing hire‑purchase or lease agreements, and asset‑backed business loans. These options can be combined with invoice or purchase‑order finance to cover larger contracts. Get a Free Eligibility Check to see which solution suits your business.

We are not a lender or financial adviser. UK Business Loans introduces businesses to third‑party brokers and lenders. Completing an enquiry is free and no obligation. Offers are subject to lender criteria.

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Executive summary: can manufacturers refinance equipment to fund orders?

Yes — engineering and manufacturing firms can often convert equipment value into working capital without stopping production. Common methods are asset refinance (sale to a funder then leaseback), sale & leaseback, refinancing existing HP/lease agreements, or taking asset‑backed loans. Advance rates vary by asset but typically range from 30–80% of market value depending on type and condition. For larger orders, combining equipment refinance with invoice finance or purchase‑order finance is a common approach. Get Started — Free Eligibility Check

What “refinancing equipment” means for manufacturers

“Refinancing equipment” is any process that frees cash tied up in machinery and plant. That can include:

• Asset refinance / equipment equity release: converting owned equipment into cash through a sale to a finance provider, or a secured loan using the equipment as collateral.
• Sale & leaseback: sell equipment to a funder and lease it back so you keep using it while accessing capital.
• Chattel mortgage / refinance of HP: replace or refinance existing hire‑purchase with new terms to improve monthly cashflow.
• Asset‑backed business loan: secured loan using machinery as security to release funds fast.

Typical uses: funding a single large order, bridging supplier payments, scaling capacity or smoothing seasonal demand without diluting ownership.

Common refinance options and how they fund new orders

Asset refinance (equipment sale to a funder)

How it works: you sell equipment to a lender or specialised fund and receive a cash lump sum. You may continue to use the asset under a lease or licence.

Pros: fast access to capital; no need to stop production. Cons: asset is no longer on your balance sheet as owned; terms depend on valuation.

Typical advance rates: 30–70% of market value (higher for specialised, in‑demand assets). Timeline: days to 2 weeks for simple deals.

Sale & leaseback

How it works: sale followed by an operating or finance lease allowing continued use. This is popular where continuous use is essential (CNC centres, presses, test rigs).

Pros: immediate cash, preserves operational continuity; can be tax‑efficient depending on lease type. Cons: ongoing lease costs; potential effects on tax and accounting — check with accountant.

Advance rates and terms vary with asset life; process typically takes 1–4 weeks depending on valuation complexity.

Refinance existing HP or lease deals

How it works: refinance or novate an existing hire‑purchase or lease to a different lender to reduce payments or free short‑term cashflow.

Pros: can lower monthly payments or release equity; quicker than arranging a new sale & leaseback. Cons: may incur early settlement fees.

Asset‑backed loan or overdraft against equipment

How it works: borrow against the value of machinery. Loan secured on specific plant, often faster than unsecured options for the same amount.

Typical advance: 30–80% of agreed valuation depending on age and liquidity. Timelines: 3–14 days for many lenders.

Combined solutions (equipment refinance + invoice / PO finance)

For larger orders, lenders often combine asset refinance with invoice finance or purchase‑order finance so you can cover supplier deposits, production costs and payroll. This blended approach reduces the funding gap for large production runs.

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Eligibility, lender criteria & documents lenders want

What lenders look for:

• Asset ownership and title (owned outright gives best outcomes).
• Age, condition and marketability of equipment — specialist assets with resale markets score higher.
• Recent company accounts (12–24 months), management accounts and bank statements.
• Order book or purchase orders proving the intended use of funds.
• Management experience and trading history.

Documents to prepare:

• Asset schedule with serial numbers, photos and estimated market values.
• Invoices or proof of purchase for the equipment.
• Company accounts, VAT returns, and recent bank statements.
• Purchase orders or contracts for the new order you need to fund, and a cashflow forecast.

Note: specialist lenders will consider older equipment where there is a healthy secondary market (e.g., well‑maintained CNC machines), while others prefer newer or standard assets.

Costs, interest, tax and balance sheet effects

Costs vary by product and lender. Common charges include arrangement fees, valuation fees, interest or lease rentals, and potential early‑settlement penalties.

• Interest and rates: depend on credit profile, asset type and term — examples range widely and cannot be guaranteed.
• Fees: arrangement fees often 1–3% plus documentation costs; valuation fees may apply.
• Accounting effects: sale & leaseback generally converts owned assets into a lease liability — speak to your accountant to understand IFRS/UK GAAP impacts.
• Tax: lease payments are commonly allowable expenses; sale proceeds can affect capital allowances — get specialist tax advice for specifics.

Compliance note: Exact costs depend on lender and your circumstances. Quotes are indicative only — speak to brokers for personalised terms.

Benefits & drawbacks for manufacturers

Want to know what’s best for your business? Get a free eligibility check.

How to choose the right refinance solution

Follow these simple steps:

Step 1 — Value your assets and order

Get realistic equipment valuations and confirm purchase orders. Lenders will assess both.

Step 2 — Match product to need

Short‑term cash gaps are often best solved with asset‑backed loans or invoice finance; longer‑term restructure can suit sale & leaseback.

Step 3 — Compare quotes and terms

Consider fees, interest, covenants, exit terms and any early settlement charges. Ask how the lender values replacement costs and resale value.

Checklist for your enquiry: asset list, photos & serial numbers, company accounts, bank statements, POs and the exact funding amount and timeline.

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How UK Business Loans helps manufacturers refinance equipment

We introduce your enquiry to specialist brokers and lenders who work with engineering and manufacturing firms. Complete a short form and we’ll match you with partners who can assess your assets and funding needs — free and no obligation. Most business owners hear back within hours to a couple of business days. Submitting an enquiry will not affect your credit score.

Note: We arrange introductions for deals of approximately £10,000 and upwards.

Case study: SME engineering firm releases cash to fulfil a large order

A Midlands machining firm won a £350k order needing new tooling and raw materials. They used a sale & leaseback on surplus presses (valued at £120k) plus invoice finance to cover working capital. Outcome: order fulfilled on time, production uninterrupted, and trade margin preserved. Time from enquiry to funding: 10 business days. Individual results will vary.

Frequently asked questions

Q: Can I refinance equipment if it’s still on finance?

A: Sometimes. Many lenders will refinance outstanding HP or lease agreements, often by refinancing the outstanding balance — but that can involve early settlement fees and is subject to the existing contract’s terms.

Q: How long does a refinance take?

A: Simple asset‑backed loans or invoice finance can be arranged in days. Sale & leaseback and complex valuations typically take 1–4 weeks depending on valuations and legal checks.

Q: Will it affect my credit score?

A: Making an enquiry via UK Business Loans does not affect your credit score. Lenders or brokers may perform credit checks later if you progress to an application — they will inform you first.

Q: What equipment is acceptable?

A: Common acceptable items include CNC machines, specialist presses, fabrication kit, test rigs and certain production lines. Exclusions: low‑value or heavily customised assets without a clear secondary market. Preparation helps — provide serial numbers, photos and maintenance history.

Q: Is sale & leaseback right for me?

A: It suits firms needing immediate cash while retaining use of equipment. Consider the lease cost and long‑term ownership implications; consult your accountant for balance‑sheet and tax consequences.

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Ready to release cash from your equipment?

If you’re an engineering or manufacturing business needing working capital to fulfil new orders, complete our short enquiry and we’ll match you with lenders and brokers who specialise in equipment refinance and working‑capital solutions. It’s fast, free and no obligation.

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We are not a lender or financial adviser. UK Business Loans introduces businesses to third‑party brokers and lenders. Completing an enquiry is free and no obligation. Offers are subject to lender criteria. Lenders may perform credit and identity checks when you apply.

About the author

[Name], Content & Industry Specialist at UK Business Loans. Years of experience working with brokers and lenders in manufacturing and engineering finance. Connect on LinkedIn.

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For a broader overview of refinancing options and terms see our dedicated page on refinance-loans.

1. Can I refinance equipment to fund new orders for my manufacturing business?
Yes — engineering and manufacturing firms can often refinance owned machinery via asset refinance, sale & leaseback, chattel mortgage or asset‑backed loans to release cash for new orders, subject to asset type, age and company financials.

2. How quickly can I get equipment refinance, sale & leaseback or an asset‑backed loan?
Timelines vary by product but simple asset‑backed loans or invoice‑linked solutions can be arranged in days, while sale & leaseback and complex valuations typically take 1–4 weeks.

3. Can equipment that’s still on hire‑purchase or lease be refinanced?
Sometimes — specialist lenders and brokers can refinance or novate existing HP/lease agreements, although this depends on your current contract terms and potential early settlement fees.

4. How much can I borrow against machinery and equipment?
Advance rates commonly range from around 30–80% of agreed market value depending on asset type, condition and lender appetite.

5. What documents do lenders need for equipment refinance or asset finance?
Lenders typically ask for an asset schedule (serial numbers, photos), invoices/proof of purchase, recent company accounts, bank statements, and purchase orders or contracts showing the funding need.

6. Can I combine equipment refinance with invoice finance or purchase‑order finance for a large contract?
Yes — lenders often blend equipment refinance with invoice or purchase‑order finance to cover supplier deposits, production costs and working capital for larger orders.

7. Will refinancing equipment affect my company’s balance sheet or tax position?
It can — sale & leaseback usually converts owned assets into lease liabilities and lease payments may be tax‑deductible, so consult your accountant for IFRS/UK GAAP and tax implications.

8. What types of equipment are acceptable for refinance or sale & leaseback?
Common acceptable assets include CNC machines, presses, fabrication kit, test rigs and production lines with a clear secondary market, while low‑value or highly bespoke kit may be excluded.

9. Does submitting an enquiry via UK Business Loans affect my credit score?
No — completing an enquiry to be matched with brokers and lenders does not affect your credit score, though lenders may carry out credit or identity checks later with your consent.

10. How do I start the process to get matched with lenders for a business loan or equipment refinance?
Complete the short free enquiry form on UK Business Loans to be quickly matched with trusted UK brokers and lenders who specialise in equipment finance and working‑capital solutions.