Construction business loans: Do I need a deposit for construction asset finance?

Short answer: Many lenders ask for a deposit (commonly 10–30%), but 100% funding can be possible in specific situations — typically for new equipment via manufacturer/vendor finance, small-ticket hire‑purchase deals, sale & leaseback arrangements, or where the borrower and asset present low risk. 100% offers usually involve trade‑offs (higher rates, additional security or VAT requirements). Read on for practical examples, alternatives to cash deposits, and how to improve your chance of full funding.

What is construction asset finance?

Construction asset finance is a set of lending and leasing products that help building contractors, civil engineering firms and plant hire companies buy or access equipment without paying the full purchase price up front. Common assets include excavators, dumpers, telehandlers, lifts, scaffolding, compressors and specialist attachments.

Popular products:

• Hire Purchase (HP) — you buy the asset by paying fixed monthly instalments and usually own it at the end of the term.
• Finance Lease / Operating Lease — rental-style products, useful where ownership is not required.
• Chattel mortgage — secured loan against the asset.
• Vendor / manufacturer finance — finance arranged or supported by the supplier.
• Sale & leaseback — monetise existing assets and lease them back (often no deposit).

Whether you need a deposit affects cashflow, VAT timing and the start of site work — so it matters for construction projects where timing is critical.

Short answer — deposit vs 100% financing

Most lenders typically expect a deposit in the 10–30% range. However, 100% of the asset’s value can be financed in certain circumstances: new equipment purchased through OEM or vendor finance promotions, specialist lenders offering 0% deposit hire‑purchase on small-ticket items, sale & leaseback transactions on assets you already own, or when strong security and trading history reduce lender risk. Keep in mind: 100% finance often carries higher cost or additional terms.

Typical deposit expectations for construction asset finance

• Small-ticket equipment (typically under £50,000): many lenders will accept 0–10% deposit; vendor promotions can allow 0% deposit.
• Mid-ticket items (£50k–£200k): deposits commonly 10–25% depending on asset age and borrower profile.
• Large-ticket plant (>£200k): deposits are usually 15–30% or more unless strong security or manufacturer backing exists.

By product:

• Hire Purchase: often 0–30% (0% occasionally available, but at higher APR or fees).
• Finance/Operating Lease: lower upfront cost but overall rental payments reflect full cost plus residual.
• Vendor/manufacturer finance: promotional deals frequently reduce or remove deposits for new equipment.
• Sale & leaseback: typically no deposit because you’re converting owned assets to cash.

Used equipment usually attracts higher deposits or lower loan-to-value (LTV) because resale value and condition risk are higher.

When 100% financing is possible — conditions & examples

Asset and lender types most likely to fund 100%

• New plant and equipment bought through an approved dealer/OEM finance scheme.
• Specialist lenders and brokers focusing on small‑ticket equipment finance.
• Manufacturer/vendor promotions (seasonal or campaign finance offers).
• Sale & leaseback for assets you already own — a liquidity tool that usually provides full value less fees.
• Invoice-backed or receivable-backed arrangements where upcoming cash inflows secure asset purchase.

Borrower & deal factors that help

• Strong trading performance and clean company accounts.
• Low-risk asset with a robust secondary market (e.g., mainstream excavators).
• Existing relationship with the dealer or lender and clear contracted work.
• Willingness to provide security (company charge) or accept personal guarantees where required.

Mini case studies (illustrative):

• Example A: Contractor orders new telehandler (£28,000). Dealer offers 100% OEM finance over 48 months as a promotional package — deposit 0%, fixed monthly payments, slightly higher APR than a standard HP.
• Example B: Firm buys a used 12‑tonne excavator (£85,000). Specialist lender requires 20% deposit because of residual value uncertainty.

Trade-offs of 100% financing — costs & commercial considerations

Choosing 100% financing may seem attractive, but consider:

• Higher interest rates or fees: lenders price in extra risk if you borrow the full value.
• More security: additional charges over company assets, or personal guarantees may be required.
• VAT timing: many lenders won’t finance VAT, so you may need cash to cover it unless included in the deal.
• Residual and balloon risks: lease rents and end-of-term options affect total cost and flexibility.
• Borrowing capacity: 100% deals can reduce future borrowing headroom or trigger covenants.

Tip: compare total cost of ownership (monthly payment × term + fees) versus the benefit of retaining cash for operations.

Alternatives to paying a cash deposit

• Trade-in / part-exchange: reduces the cash deposit required.
• Vendor / manufacturer finance: promotional 0% deposit deals for new equipment.
• Operating lease / contract hire: low or no upfront cost at the expense of eventual ownership.
• Sale & leaseback: free up capital from existing plant and lease it back.
• Invoice finance or bridging loans: short-term solutions to cover VAT or deposit requirements.
• In-kind or alternative security: parent company guarantee, letter of credit or other collateral.

How to increase your chance of 100% funding — checklist

Prepare before you apply — lenders move faster when you provide clear evidence:

• Latest 6–24 months of management accounts and a simple cashflow forecast.
• Formal quotes from dealers with manufacturer details and serial numbers.
• Proof of contracts or purchase orders that link the asset to revenue.
• Details of existing security, outstanding finance and a list of company directors.
• Identify lenders who specialise in construction equipment finance — specialist appetite matters.
• Be flexible on term, residual payments or option to provide additional security if needed.

Need help identifying likely funders? Start a Free Eligibility Check — our introducer service matches you to lenders and brokers that specialise in your asset and sector.

Applying — what lenders will ask & typical timelines

Common document checklist:

• Company registration and VAT details.
• Recent management accounts, bank statements and cashflow forecast.
• Quotes for the asset and supplier details.
• Proof of identity for directors where required.

Timelines:

• Small-ticket approvals: often 24–72 hours from submission to offer (subject to checks).
• Mid/large-ticket: typically 1–3 weeks including valuation, searches and credit checks.

Applying via UK Business Loans to get matched does not affect your credit score; lenders may perform formal checks later in the process.

Real costs example — deposit vs 100% finance (illustrative)

Illustration (example only): £50,000 new excavator

• 20% deposit (£10,000) + HP over 48 months at 6.5% APR = lower monthly payments and lower total interest.
• 0% deposit + HP over 48 months at 9.5% APR = higher monthly payments and greater total interest, but preserves cash for working capital.

These figures are illustrative only — speak to lenders to get accurate quotes for your situation.

Why use UK Business Loans for construction asset finance

We don’t lend — we introduce. If you need £10,000 and above for plant and machinery, we quickly match you to specialist lenders and brokers who understand construction. Benefits:

• Free, no-obligation enquiry — submit one short form and we do the searching for you.
• Fast matching to lenders who specialise in equipment and construction asset finance.
• Access to vendor/OEM finance and alternatives like sale & leaseback.
• We help you compare options so you can choose the best commercial fit.

Get Quote Now — Free Eligibility Check

UK Business Loans is an introducer — we do not lend or provide regulated financial advice. We match you to lenders and brokers where appropriate.

Frequently asked questions

Can I get 100% finance on construction equipment?

Sometimes — for new equipment via OEM/vendor finance, small-ticket HP products, or sale & leaseback. Availability depends on asset, borrower strength and lender appetite.

Do lenders fund used construction equipment?

Yes, but used assets typically attract higher deposits and lower LTVs due to condition and valuation risks.

Will financing cover VAT?

Some deals include VAT (notably some HP arrangements), but many require you to pay VAT up front. Confirm with the lender whether VAT is included in the quoted finance.

Will applying through UK Business Loans affect my credit score?

No. Submitting an enquiry to UK Business Loans will not affect your credit score. Lenders may carry out credit checks later if you choose to proceed.

How long until equipment is funded?

Small-ticket deals: 24–72 hours. Larger or bespoke deals: one to three weeks, depending on valuation, searches and underwriting.

Next steps — 3 simple actions

1. Click Get Quote Now — Free Eligibility Check and complete a short enquiry (takes under 2 minutes).
2. We match you to the most relevant lenders/brokers for construction equipment finance.
3. Lenders/brokers contact you with tailored quotes — compare and decide. No obligation to proceed.

Important: Our introducer service does not guarantee finance. All lending decisions, terms and conditions are made by the partner lenders and brokers.

/construction-business-loans

1. Can I get 100% finance for construction equipment?
Sometimes — 100% finance is possible for new kit via OEM/vendor promotions, small‑ticket hire‑purchase deals, specialist lenders or sale & leaseback, but availability depends on asset type, borrower profile and lender appetite.

2. How much deposit do lenders usually require for construction asset finance?
Most lenders typically ask for a deposit of around 10–30%, with small‑ticket items often 0–10% and large‑ticket plant usually 15–30% or more.

3. Will construction asset finance cover VAT on equipment purchases?
Some finance products (notably certain HP deals) can include VAT in the finance, but many lenders require VAT to be paid up front — always confirm with the lender.

4. Do lenders fund used construction equipment?
Yes — many lenders finance used plant, but used assets usually attract higher deposits or lower loan‑to‑value because of resale and condition risk.

5. What is sale & leaseback and can it provide full funding?
Sale & leaseback converts owned plant into cash and typically provides near‑full funding (less fees) while allowing you to lease the equipment back for ongoing use.

6. Which finance products suit construction businesses buying plant and machinery?
Common products include Hire Purchase, finance/operating leases, chattel mortgages, vendor/OEM finance and sale & leaseback, each with different ownership, deposit and tax implications.

7. What documents and information do lenders usually ask for when applying for construction asset finance?
Lenders typically request company registration and VAT details, recent management accounts and bank statements, supplier quotes, proof of identity for directors and a simple cashflow forecast or purchase order.

8. How long does it take to get construction equipment funded?
Small‑ticket deals can be approved in 24–72 hours, while mid to large ticket or bespoke financings usually take one to three weeks including valuations and searches.

9. Can I apply if my business has imperfect credit or limited trading history?
Yes — some specialist lenders and brokers work with businesses with poor credit or short trading histories, though terms, deposits or fees may be less favourable.

10. Will submitting an enquiry on UK Business Loans affect my credit score or commit me to an application?
No — completing the UK Business Loans enquiry form is just a free introduction to matched lenders and brokers, it does not affect your credit score and is not a formal application.