Lenders typically advance a proportion of their own valuation of the machinery, not its original price or a dealer's asking price, and deduct any finance still outstanding. For mainstream, well-maintained plant with a strong resale market, that proportion is often towards the upper end of what lenders offer; for older, specialist or fixed equipment it's usually lower. The British Business Bank's own example shows a refinance at around 70% of an asset's value.
The amount is then checked against affordability, so a business with valuable kit but tight cash flow may be offered less than the asset alone would support. Our refinance facilities typically range from £50,000 to £10 million, subject to lender criteria. Remember the machinery secures the agreement and can be repossessed if repayments aren't kept up.
The basic calculation
Most refinance offers come down to three numbers: the lender's valuation, the percentage it will advance against that valuation (often called loan-to-value) and any settlement needed to clear existing finance. Fees then come off the top.
The British Business Bank sums up the limit simply: you can't borrow £15,000 against an asset worth £10,000. It also notes that the amount depends on the asset's type, condition, age and how much of it you own.
| Valuation | Illustrative advance | Owed | Available | |
|---|---|---|---|---|
| Tracked excavator (owned) | £65,000 | £45,500 (70%) | £0 | £45,500 |
| Telehandler (on HP) | £50,000 | £35,000 (70%) | £22,000 | £13,000 |
| Ageing dumper (owned) | £8,000 | £4,000 (50%) | £0 | £4,000 |
| Total | £123,000 | £84,500 | £22,000 | £62,500 before fees |
These percentages are purely illustrative. Real advances vary by lender, asset and your circumstances, and affordability can reduce the final figure.
How lenders value machinery
Lenders want to know what the machine would realistically sell for if they ever had to recover it, so their figure is usually more cautious than a retail price. For lower-value or very common assets, a lender may use a desktop valuation based on make, model, year and hours. For higher-value, older or unusual kit, it will often instruct an independent valuer to inspect it.
Professional valuers in the UK commonly work to the RICS Red Book, which defines market value as the price between a willing buyer and seller after proper marketing. For plant and equipment, the standards require the valuer to say whether the valuation assumes the asset stays in place, working, or is removed for sale. That distinction matters: a production line valued in place can be worth far more than the same equipment dismantled and sold piece by piece.
To speed things up, have the make, model, year, serial number, hours or mileage, service records, photos and proof of ownership or settlement figures ready.
What pushes the figure up or down
As a rule of thumb, the easier it would be for a lender to collect the machine and sell it on, the more it is likely to advance.
| Factor | Tends to help | Tends to reduce |
|---|---|---|
| Type of asset | Mobile, mainstream plant and commercial vehicles | Bespoke, fixed or highly specialised equipment |
| Age and remaining life | Newer machines with years of working life left | Older machines nearing the end of their useful life |
| Condition and records | Full service history, low hours, documented maintenance | Missing records, high hours, visible wear or damage |
| Brand and resale demand | Well-known makes with an active used market | Niche makes or models with few buyers |
| Mobility | Easy to collect, transport and resell | Built into a building or production line |
| Ownership | Owned outright with clear title | Large balance outstanding or unclear ownership history |
How long you can repay over
The repayment term is tied to how long the machine will keep working. The British Business Bank notes that refinance terms depend on the asset's working life and are usually spread over up to five years, although lenders can go longer on durable, high-value assets. Our refinance facilities typically run from one to eight years.
Many lenders also set a limit on how old the asset can be by the end of the agreement, which means older machinery may only qualify for a shorter term, and therefore higher monthly payments, even if the valuation looks healthy.
Affordability: the second limit
Even if your machinery would support a large advance, lenders still need to see that the business can meet repayments from its trading income. They'll usually look at recent accounts, bank statements and existing commitments. If the numbers are tight, the offer may be smaller or over a longer term than the asset alone would allow.
This is also where refinance differs from an unsecured loan. Because the lender is relying on the machinery, it can sometimes help businesses that have been turned down for a business loan, but it won't replace a basic ability to repay. Our comparison of asset refinance and business loans sets out the trade-offs.
Ways to raise more, and to borrow wisely
- Pool assets. Lenders can often look at several machines or a whole fleet together, so assets with strong equity support those with less.
- Keep records. Service history and hour logs give valuers confidence and can lift the figure.
- Choose the right route. Plant and machinery refinance, sale and leaseback or broader asset refinance can produce different outcomes for the same kit.
- Borrow what you need. Raising the maximum isn't always wise. A smaller advance can mean lower payments and less strain if trading dips.
- Check the tax position. Selling machinery in a sale and leaseback can create a balancing charge where you've claimed capital allowances, as GOV.UK's HS252 helpsheet explains. Speak to your accountant first.
How we can help
We're a credit broker, not a lender. Send us a list of your machinery, its age and condition, and any finance on it, and we'll give you an early view of what lenders on our panel might advance and how that compares across routes. You can see how we've helped a plant hire company with cash flow in a similar position. Personal guarantees may be required, and the machinery may be repossessed if repayments aren't kept up. Call us on 01604 355800.
Key takeaways
- Lenders advance a proportion of their own cautious valuation, less any finance still owed on the machine.
- Mobile, mainstream, well-maintained machinery usually supports a higher advance than specialist or fixed kit.
- The term is tied to the machine's remaining working life, and older assets may only qualify for shorter terms.
- Affordability can cap the amount even when the machinery is valuable.
- The machinery secures the agreement and can be repossessed if repayments aren't kept up.
We are a credit broker, not a lender. Any finance is subject to status and the lender's assessment. This guide is general information, not personal financial, legal or tax advice.
Sources checked
Information checked on . General information only, not financial, legal or tax advice. Finance is subject to status and lender approval.