TL;DR
Business equipment finance allows UK companies to acquire machinery, technology and tools without upfront payment. FLA reports equipment finance approval rates of 96 percent. Business equipment and plant finance grew 2 percent year-on-year in January 2026. AIA of up to £1 million is available under hire purchase. Finance is available for new and used equipment from specialist lenders.
Last reviewed: June 2026 | Sources: FCA Register, FLA, HMRC, legislation.gov.uk
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Key Facts AIA limit: £1,000,000 (2026/27)WDA main pool: 18% per yearFLA equipment growth: 2% YoY (Jan 2026)Approval rate: 96% |
What is business equipment finance?
Business equipment finance covers the acquisition of machinery, tools, technology, manufacturing equipment and other tangible assets through a lender rather than outright purchase. The lender purchases the equipment and the business uses it immediately, making fixed monthly payments over an agreed term. It is available as hire purchase, finance lease or operating lease.
The FLA reports the business equipment and plant and machinery finance sector grew 2 percent year-on-year in January 2026, with the overall asset finance market reaching £47.7 billion in 2024. FLA estimates that equipment finance is used in approximately 40 percent of all business investments in machinery and equipment.
What types of equipment can be financed?
Manufacturing machinery (CNC machines, injection moulding, printing, packaging), IT and technology equipment (servers, networking, specialist computing), medical and dental equipment, catering equipment and commercial kitchen installations, renewable energy equipment including solar and battery storage, office furniture and fit-out, and agricultural machinery. Soft assets such as software can be financed at higher rates reflecting faster depreciation.
Tax relief on business equipment finance
Under hire purchase, AIA gives 100 percent first-year relief on qualifying plant and machinery up to £1 million in the year of acquisition. Equipment exceeding the AIA limit enters the main capital allowance pool at 18 percent WDA per year. Integral features and long-life assets go into the special rate pool at 6 percent WDA. Under a finance lease, the lender claims capital allowances and the business deducts lease payments as operating expenditure. For most SMEs purchasing long-lived equipment, hire purchase and AIA gives faster tax relief than a lease structure.
Business Equipment Finance: Key Lender Criteria
| Factor | What to Check | Why It Matters |
|---|---|---|
| APR | Ask for APR not flat rate | Flat rate understates true cost |
| Arrangement fee | 0-2% of facility | Adds to total cost |
| Min trading history | 6 months to 2 years | Rules out newer businesses |
| Asset minimum | £3,000-£25,000 | Some lenders won't do small tickets |
| Sector experience | Check lender specialisms | Specialist lenders know asset values better |
| Early repayment | Check ERCs | Can be significant on longer terms |
| FCA registration | register.fca.org.uk | All UK lenders must be FCA authorised |
Source: FLA, NACFB, lender published criteria.
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Disclaimer This guide is for information only and does not constitute financial advice. Asset finance products vary by lender and business circumstances. Always verify lender details on the FCA Financial Services Register at register.fca.org.uk before applying. Kael Tripton Ltd is an independent editorial publisher and is not regulated by the FCA. |
Frequently asked questions
Can I finance used business equipment?
Yes. Used equipment finance is available from many lenders, though at higher rates reflecting increased residual value risk. Lenders may require evidence of condition and may commission an independent valuation for higher-value items. Popular used categories including forklifts, agricultural machinery and commercial vehicles have active secondary markets supporting competitive rates.
What is the minimum amount for business equipment finance?
Minimum amounts vary: Nucleus and Fleximize from £3,000; Portman from £5,000; Shawbrook from £25,000. For smaller amounts, business credit cards or small business loans may be more appropriate.
Can I finance equipment for a business I have just started?
Some lenders including Nucleus and Time Finance consider businesses trading for six months. Most mainstream lenders require two years. Startups can improve prospects by offering a deposit, providing director personal guarantees and choosing hard assets with strong resale markets.
Is equipment finance affected by supply chain delays?
Equipment finance approval is typically tied to a specific supplier quotation. If there is a delay, most lenders hold the offer open for 30 to 90 days. For equipment with very long lead times, confirm with your lender before committing. Some lenders agree staged drawdown for phased delivery.
Does equipment finance affect my ability to get other business finance?
Equipment finance under HP or finance lease adds to both asset and liability sides of the balance sheet, affecting gearing ratios. However the asset acquired should represent productive capacity that offsets the liability. Discuss structure with your accountant if you anticipate needing additional finance during the equipment finance term.
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Sources FLA: Asset Finance Statistics |
