Funding for business equipment and kit


Business equipment and kit are often critical for the success of any business, but updating and buying new kit can also be a major expense, with many things to carefully consider.

If you need to purchase, replace or upgrade machinery, vehicles, furniture, information technology or tools, you may find yourself in need of bespoke funding to make it happen, especially if the funding needs are complex and traditional banks find it difficult to approve your funding in the current climate.

Whether you need to lease, buy or borrow, there is a range of funding solutions to consider. These include:

Finance lease

A finance lease works in a similar way to renting any equipment that is needed. The asset is typically leased for its useful life. This means that it is not owned at the end of the agreement but gives flexibility and means that your business will not be left with outdated equipment.

Operating lease

 An alternative to a finance lease is an operating lease. This is where the lender will effectively rent the machinery or equipment to your business. The difference is that the rental is calculated not on the total cost of the equipment but on the difference between the initial cost and the estimated residual value of it at the end of the rental period. This can be a helpful way to enable the use of more expensive pieces of equipment for businesses. As with a finance lease, at the end of the agreement the equipment is either returned, sold to a third party by the lender or a new lease agreement is entered into.

Contract hire

Contract hire is a form of operating lease and is most commonly used to access new vehicles. Payments are calculated based on the difference between the purchase value and the estimated residual value of the vehicle at the end of the agreement. This helps to keep payments lower and, as with operating leases, generally can enable a more expensive vehicle to be acquired.

Hire purchase

Should you as a business owner prefer to own the asset at the end of the agreement, then a hire purchase facility may suit your circumstances better. Payments are similar to a finance lease and are based on repaying the full cost of the asset but at the end of the agreement - subject to an additional option to purchase fee - ownership will revert to you.


Loans are a common way of funding business equipment and kit, especially for large or long-term projects. You borrow a lump sum from a lender and repay it with interest over a period of time. This can help you access the funds you need quickly, retain ownership of the equipment and kit, and choose from a variety of loan types and repayment options.

When it comes to deciding which funding solution is right for your business, assess your equipment and kit needs and evaluate the pros and cons of each funding option.

Armstrong Watson has access to a wide range of lenders, from banks and asset finance providers to alternative lenders, who can offer you competitive rates and flexible terms.

If you would like support in accessing funding for business equipment and kit, please get in touch. Call 0808 144 5575 or email for more information.

Contact us

Related news

Views of family and owner-manged business sought for Armstrong Watson’s 2023 survey

  • 2nd November 2023

Funding options for management buyouts

  • 11th October 2023

Cost of Doing Business – Refinance

  • 5th April 2023