What is equipment finance?

Equipment finance is a way for limited companies to fund the purchase or use of business assets — such as construction machinery, delivery vehicles, manufacturing kit, medical scanners, catering equipment or IT hardware — by spreading the cost over an agreed term instead of paying the full price up front.

Rather than tying up working capital, your business keeps using the equipment while making predictable payments. Finance can be secured against the asset itself, and many products allow flexible deposits, maintenance packages or upgrade options at the end of the term.

Key benefits:

• Preserve cash — keep funds available for operations and growth.
• Predictable budgeting — fixed instalments help cashflow planning.
• Access to modern kit — finance lets you upgrade without a single large outlay.
• Potential tax advantages — different treatments apply depending on product and accounting (see tax section).

Types of equipment finance (choose the right product for your asset)

Hire Purchase

Hire purchase (HP) splits the cost into fixed monthly payments; ownership typically transfers to you after the final payment. Best for firms that want to own the asset at term-end. Typical terms: 2–5 years (longer for high-value kit).

Finance Lease

With a finance lease the funder retains ownership while you have use of the equipment. Payments usually cover most of the asset value. Good when you want low upfront cost but don’t require ownership immediately.

Operating Lease

Similar to rental: shorter terms, maintenance and upgrades can be included. Ownership remains with the funder and you return the asset at the end. Ideal for rapidly depreciating assets or tech that you’ll replace frequently.

Sale & leaseback (asset refinance)

Sell equipment you already own to a funder and lease it back to free capital while remaining operational. Useful for releasing tied-up cash without losing access to the asset.

Vendor / manufacturer finance

Supplier or manufacturer-backed schemes that can offer competitive rates or promotional terms, often useful for specialised or high-cost equipment.

Quick comparison (high level):

Not sure which suits you? Get a quick, no‑obligation comparison: Get Quote Now — Free Eligibility Check.

Is equipment finance right for your business?

Equipment finance is usually the right choice when you:

• Need to acquire essential kit now but want to preserve working capital.
• Prefer predictable monthly costs rather than a single large capital spend.
• Operate in sectors where up‑to‑date equipment affects competitiveness (construction, manufacturing, healthcare, catering, transport).
• Want flexibility to upgrade or refinance assets in future.

It may be less suitable if you can buy outright without impacting cashflow, or if you prefer not to have any contractual obligations on assets. If you’re unsure, our partners can show example costings so you can compare buy vs finance.

How costs, interest and tax work

Costs depend on the product, asset value, term, deposit, and your business credit profile. Typical cost items include interest (expressed as APR or a negotiated rate), arrangement fees, maintenance or insurance, and possible balloon payments at term end.

Simple definitions:

• APR — an annualised cost figure that includes some fees; useful for like‑for‑like comparisons but may not capture every lender fee.
• Balloon payment — a larger final payment to reduce monthly instalments.
• Deposit — optional upfront contribution that can lower monthly payments.

Tax and VAT (summary, not advice):

• VAT: if you buy outright you usually pay VAT up front; some leasing arrangements let you spread VAT across payments. Check with your supplier and lender.
• Capital allowances: buying or certain finance arrangements may allow you to claim capital allowances or use Annual Investment Allowance (AIA) — consult your accountant or HMRC guidance for specifics.

Because tax treatment varies by product and circumstance, the exact costs and benefits will be shown in the quotes you receive. Start with a free eligibility check to get personalised illustrations: Start your free quote.

How UK Business Loans operates with equipment finance

UK Business Loans is an introducer that helps match your business to lenders and brokers experienced in equipment finance. We do not provide loans ourselves — our role is to find the best partners for your needs so you can compare real offers and move quickly.

Our matching process

1. Complete a short enquiry (around 2 minutes) — basic business and equipment details.
2. We assess your needs and match you to 1–3 specialist brokers or funders who handle your sector and asset type.
3. Selected partners contact you with eligibility feedback and tailored quotes (often within hours; more complex cases may take up to 48 hours).
4. If you choose to proceed the lender performs checks and funds directly on agreed terms.

We share your details only with the selected partners needed to provide quotes and follow legal privacy/GDPR requirements. Completing the enquiry is non‑binding and does not affect your credit score — lenders typically perform credit checks only at formal application stage.

Want a fast match to specialist equipment funders? Get Quote Now — Free Eligibility Check.

For more background on the finance options available across the market see our guide to equipment finance.

Preparing to apply — what you’ll need

Being ready speeds quotes and approval. Typical documents and info lenders ask for:

• Business details: company name, registration number, time trading, contact details.
• Financials: recent bank statements, latest accounts or management accounts, turnover band.
• Equipment details: supplier quote, make/model, age (if used), cost and delivery lead time.
• Director information: ID and contact details for decision-makers.

Tip: have a supplier quotation or pro‑forma invoice ready — it makes the quote process faster and more accurate.

Use cases & industry examples

Equipment finance is widely used across UK industry. Typical examples:

• Construction — a contractor funds a new excavator on hire purchase to preserve cash for wages and materials.
• Manufacturing — a SME upgrades a CNC machine via a finance lease to increase capacity without a large capital expense.
• Healthcare — a clinic leases imaging equipment with a maintenance package to keep technology current.
• Catering & hospitality — a restaurant funds kitchen fit-out and ovens through asset finance to scale up service.
• Transport & logistics — fleet replacement via sale and leaseback to release working capital while retaining vehicle use.

If any of these sound like your situation, start with a free eligibility check so we can match you to the right specialist: Start your 2‑minute enquiry.

Frequently asked questions

Next steps — get your free eligibility check

Ready to explore options? Complete a simple 2‑minute enquiry and we’ll match you to lenders and brokers who specialise in your asset and industry. It’s free, quick and there’s no obligation: Get Quote Now — Free Eligibility Check.

Legal & compliance note

UK Business Loans is an introducer — we do not lend or give regulated financial advice. We connect businesses to lenders and brokers who provide quotes and (where required) will set out costs and terms. Submitting an enquiry does not commit you to any product. For tax or accounting treatment, please consult your accountant or HMRC guidance.