Plant finance for contractors, plant hire firms and quarry operators

• A contract or framework award that needs more machines on site than the current fleet can supply, often with a start date that leaves little time.
• Machines reaching the hours at which they stop paying their way, where repair bills and downtime start to exceed the cost of replacement.
• Too much hire-in. A contractor spending heavily on hired machines it uses most weeks of the year is often better off owning them.
• Fleet growth at a plant hire company where utilisation on a class of machine is high and customers are being turned away.
• Emissions and site rules, such as clients or urban sites that will only accept newer engines, forcing replacement before the old machine is worn out.
• Releasing cash from owned plant to fund a deposit, a tax bill or a slow-paying contract, through asset refinancing.

For most contractors the first question is not how to finance a machine but whether to own it at all. Ownership pays when the machine works most weeks; hiring in pays when demand is patchy, because the hire company absorbs idle time, servicing and breakdowns.

Illustration only, with round hypothetical figures. A groundworks firm hires in a 13-tonne excavator at £1,000 a week and has needed one for about 40 weeks of each of the last two years, so it is spending roughly £40,000 a year on hire. Buying a similar used machine for £90,000 on hire purchase would mean monthly finance payments plus insurance, servicing, transport and some repairs. If those ownership costs come to meaningfully less than £40,000 a year, and the machine will still have a resale value at the end, owning is likely to win. If the firm only needed a machine for 15 weeks, hire would be cheaper. Lenders find this comparison persuasive because it shows the payments are replacing an existing cost rather than adding a new one.

Plant is one of the easiest asset classes to fund, because it has deep dealer, auction and export markets. That does not make every machine equal.

• Make and model. Mainstream earthmoving brands in common weight classes hold value well and attract the widest choice of lenders. Specialist plant such as piling rigs, large mobile cranes, tunnelling equipment and high-reach demolition machines has a narrower market, so fewer lenders will fund it and terms may be shorter.
• Hours and history. Telematics hours, dealer service records and any major component rebuilds matter more than the year of manufacture. A machine with documented servicing and moderate hours can be worth far more than a newer one worked hard.
• Engine emissions stage. Newer engines are increasingly required on urban and major-infrastructure sites. In Greater London, machinery used on construction sites must meet the Non-Road Mobile Machinery emission standards, which has reduced demand for older engines in the areas where many contractors work.
• Fuel economics. Since most construction users lost their entitlement to use rebated fuel in April 2022, set out in HMRC's red diesel reform guidance, running costs weigh more heavily in the case for replacing older, thirstier machines.
• Lifting equipment records. Cranes, telehandlers and excavators used for lifting need thorough examinations under LOLER, explained in the HSE's guidance on thorough examinations of lifting equipment. A lender buying a used machine will expect current reports.
• Security marking and tracking. Plant theft is common, so lenders like machines to be registered, marked and tracked, and will check insurance names their interest.

Attachments such as breakers, tiltrotators, buckets and crusher buckets can usually go on the same agreement if they are on the dealer's invoice. Used and auction machines are widely funded, though lenders need clear title and may shorten the term on high hours; our used equipment finance page explains how.

The most common mistake is over-fleeting: financing machines on the strength of one good year, then carrying payments through a quieter one. Balloon payments are a second trap, because they assume a resale value that falls if the market softens or emissions rules move on. When several agreements sit with one lender, they are often linked, so a problem on one machine can put the whole fleet in question. Directors are usually asked for personal guarantees, and a missed payment on a machine that has been stolen or damaged is still a missed payment, so check insurance cover and excess levels before signing.

VAT on a hire purchase is recoverable for most VAT-registered contractors, but it is still cash out of the business until the next return. Some lenders will fund it over a few months. And sometimes the right answer is to keep hiring in, or to buy a good used machine rather than a new one.