Construction equipment finance helps you spread the cost of machinery with tailored funding – find out more about the compare, rates and alternatives to keep your cash flow strong.
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Construction is an equipment heavy industry, and the tools required can come with a steep price tag, which is why so many companies rely on construction equipment finance.
Construction equipment finance can give you the money to buy or lease machinery without locking up your cash. You spread the cost over time while keeping enough working capital for day-to-day operations.
There's plenty of choice in the market, from traditional hire purchase to flexible loans that cover deposits or urgent equipment needs. Understanding your options can help you pick the right structure for your cash flow and growth plans.
Construction equipment finance covers borrowing or leasing arrangements that help you acquire machinery like diggers, cranes, excavators, dumper trucks, scaffolding systems, concrete mixers, and specialist tools.
Rather than paying the full purchase price upfront, you make regular repayments over an agreed period.
Most construction equipment finance companies offer repayment terms between two and seven years, depending on the equipment type and your business circumstances. The monthly payments are typically fixed, making it easier to budget and forecast your cash flow.
Construction firms often choose financing over outright purchase because it maintains financial flexibility. Instead of depleting your cash reserves on a single equipment purchase, you can spread the cost while keeping funds available for multiple projects, wages, seasonal fluctuations, and growth opportunities.
Construction equipment finance doesn’t just come in one format. Here are the main options and how they can work for you:
Hire purchase (HP) agreements let you gradually gain ownership of equipment through monthly repayments. You typically pay a deposit (usually 10-30% of the equipment’s value) followed by fixed monthly instalments. At the end of the agreement, you own the equipment outright.
Some HP deals include a balloon payment option, where you make lower monthly payments but settle a larger final amount. This structure can improve cash flow during the agreement term.
With a finance lease, you use the equipment without technically owning it. You make fixed monthly payments over the lease term, and at the end, you may have the option to purchase the equipment for its residual value or return it to the lender.
Finance leases often have lower monthly payments than hire purchase agreements, but you don't automatically gain ownership.
Operating leases provide short-term access to equipment for specific projects. These arrangements suit businesses that need machinery for particular contracts rather than ongoing operations. Monthly payments are typically lower, but you return the equipment at the lease end without ownership options.
If you already own construction equipment, refinancing can release capital tied up in these assets. You secure a loan against the equipment's current value, freeing up cash for other business needs while continuing to use the machinery.
Yes, many lenders offer used construction equipment asset finance. Used equipment financing typically requires the machinery to be relatively recent (usually less than ten years old) and in good working condition. The loan-to-value ratio may be lower than for new equipment, often requiring a larger deposit.
Used equipment finance can be particularly cost-effective for smaller construction businesses or those needing specialised machinery for specific projects.
The primary draw of construction equipment finance is that it helps you preserve working capital for essential business operations.
So instead of depleting your cash on buying new equipment, you keep cash reserves back for wages, materials, subcontractor payments, and unexpected project costs.
Financing also lets you match repayments to your business's cash flow cycles. Construction businesses often experience seasonal variations in demand, and structured repayments can accommodate these fluctuations better than large upfront payments.
You get access to the latest equipment without the financial strain of full purchase prices. Modern machinery often comes with improved fuel efficiency, safety features, and productivity benefits that can enhance your competitive position.
From a tax perspective, construction equipment finance can offer tax benefits. Depending on the financing structure, you may be able to deduct lease payments as operating expenses or claim capital allowances on purchased equipment.
In simple terms, you subtract the equipment costs from your profits (which reduces your taxable income). However, you should consult your accountant about the specific tax implications for your situation.
Financing significantly improves cash flow management by spreading equipment costs over time rather than requiring large upfront payments. This is particularly valuable in construction, where project payments may be delayed or seasonal demand creates uneven income patterns.
Fixed monthly repayments make budgeting more predictable, while preserving cash reserves helps you handle the irregular payment cycles common in construction contracts. You can also structure repayments to align with your business's seasonal patterns, with some lenders offering flexible payment schedules.
When you need to finance construction equipment, there are a few different types of lenders to consider. These generally fall into three categories: traditional high street banks, specialist asset finance companies, and online or digital-first lenders. Each option has its own strengths, and the best fit depends on your business needs, how fast you need funding, and how straightforward your finances are.
High street banks
Banks like Barclays, HSBC, and Lloyds offer business loans and equipment finance alongside their usual banking services. They’re often a good option for established businesses with strong credit and trading history. That said, the application process can be slower and usually involves more paperwork.
Specialist asset finance companies
Firms such as Aldermore, Close Brothers, and JCB Finance focus specifically on equipment and vehicle funding. Because they work closely with construction and other trades, they often understand the sector’s needs and can offer tailored solutions. They may offer more flexibility than high street banks, though rates and terms can vary depending on the asset or business profile.
Online and digital-first lenders
Lenders like iwoca and others offer a faster and more flexible route to finance. Applications are often fully online, decisions come quickly, and paperwork is kept to a minimum.
Many also take a more rounded view of your business, looking beyond just credit scores. This can be especially helpful for small or growing firms that need to move quickly when a job comes in or a piece of kit becomes available.
When you apply for construction equipment finance, lenders typically require recent business accounts, bank statements, and details about the equipment you want to purchase. You'll also need to provide information about your business's trading history, turnover, and credit background.
Most lenders look for businesses that have been trading for at least 12 months, though some specialist providers work with newer companies. Annual turnover requirements vary, but many lenders expect at least £100,000-£150,000 for equipment finance applications.
The application process usually involves:
Finance rates for construction equipment depend on factors including your credit score, business performance, equipment age and type, loan amount, and repayment term.
Rates typically range from 6-20% APR, with better rates available for established businesses and newer equipment.
Most construction equipment finance companies prefer business credit scores above 60 (on Experian's 0-100 scale), though requirements vary between lenders. Your personal credit score also matters, particularly for smaller businesses where personal and business finances are closely linked.
Some lenders consider factors beyond just credit scores, including business performance, cash flow stability, and industry experience. Some specialist providers work with businesses that have lower credit scores but strong trading histories or valuable equipment as security.
When traditional equipment finance doesn't suit your needs, an iwoca Flexi-Loan provides an alternative.
Our flexible business loans up to £1,000,000 can fund equipment purchases, cover deposits for larger financing deals, or provide working capital to support equipment-related expenses.
Unlike traditional asset finance, our Flexi-Loan doesn't require the equipment as security, giving you more flexibility in how you use the funds. You can draw down and repay funds as needed, only paying interest on the amount you use.
The application process is all online, with decisions typically made within 24 hours and funds available within days. Our Flexi-Loan complements traditional equipment finance by filling gaps where specialist lenders can't help – whether that's covering shortfalls, funding deposits, or providing flexible working capital alongside equipment purchases.
Ready to explore flexible funding for your construction equipment needs? Apply for an iwoca Flexi-Loan today and you’ll usually get a decision in 24 hours.
