Plant hire finance: key facts
- For a hire company the machines are the stock you sell time on, so lenders look past the individual asset to fleet utilisation, the age profile of the fleet, your replacement plan and your debtor book. Finance is subject to status and the lender's checks.
- Growing hire firms often fund machines in batches through a facility or credit line agreed with a lender, drawing down each machine against it rather than making a fresh application every time. Availability, limits and terms depend on the lender and your figures.
- Matching each agreement's end date to when you expect to sell or part-exchange the machine helps you avoid owing more than it's worth when it leaves the fleet.
- HMRC's CIS 340 guide lists "plant hire with operator for use on site" as a construction operation within the Construction Industry Scheme, and "delivery, repair or maintenance of construction plant or hire equipment without an operator" as excluded.
- So operated hire income can be paid to you after CIS deductions (20% if you're a registered subcontractor, 30% if not, nothing with gross payment status), while self-drive hire income is generally paid without them.
- CIS 340 also says that when a subcontractor hires plant from a third party to do construction work, the hire cost can be treated like materials when the contractor works out the CIS deduction. Plant the subcontractor owns doesn't get that treatment.
- Low-loaders and plant wagons over 3.5 tonnes usually need a goods vehicle operator's licence, with financial standing of £8,000 for the first vehicle and £4,500 for each additional one on a standard licence (GOV.UK).
- Hire invoices for completed hire periods, backed by delivery and off-hire records, are the kind of debts invoice finance is built for; disputed damage or lost-hire charges are usually harder to fund.
How do lenders assess a plant hire company?
A lender funding a hire company looks at the fleet as a business, not just at the machine being bought: how much of the time and how much of the fleet's value is earning, how old the fleet is, how machines are replaced, who your customers are and how they pay, and how much finance is already secured on the fleet.
An owner-operator buys a machine to do its own work, so the lender's question is "can this business afford one more payment?" (our plant finance guide covers buying the machines themselves). A hire company is different: the fleet is the business, and the accounts of a hire firm can look odd to anyone who doesn't know the trade. High turnover sits alongside heavy depreciation, big finance balances and profits that swing with how busy the yard is. The broker's job is often to make sure the lender reads those figures as a hire business, not as a contractor with a lot of debt.
What lenders tend to look for
| What they look at | Why it matters to a lender | What helps you |
|---|---|---|
| Utilisation | Idle machines still have payments due. Utilisation shows whether new kit will earn its keep. | Your own utilisation figures by machine type, over at least a year, so seasonal dips are visible rather than alarming. |
| Fleet age and hours | An old fleet means a wave of replacements (and borrowing) coming; a young one may still carry a lot of finance. | A fleet register with each machine's age, hours, cost and finance status. |
| Hire income by machine type | Shows which parts of the fleet actually earn, and whether the machine you want fits the pattern. | Revenue split by category (excavators, dumpers, access, small tools and so on). |
| Debtors | Contractor customers on long terms tie up cash. Concentration on one or two customers is a risk. | An aged debtor list and your largest customers' share of turnover. |
| Existing finance | How much of the fleet is already pledged, and to how many lenders, decides how much more anyone will add. | A finance schedule: lender, machine, balance and end date for each agreement. |
| Disposals | Profit or loss on machines you sell shows whether your depreciation and resale assumptions are realistic. | A record of what you sold, when, at what hours and for how much. |
Two kinds of utilisation
Hire firms usually talk about utilisation in two ways: how much of the available time machines spend on hire (time utilisation), and how much hire income the fleet earns compared with what it cost (often called financial or rate utilisation). A busy fleet hired out cheaply can score well on the first and badly on the second. You don't need to use any particular formula, but being able to explain both, and how they move through the year, makes a lender's job much easier. We don't publish benchmark figures: they vary too much between machine types and regions to be useful.
Does operated or self-drive hire change how your finance works?
Yes, in several ways. Operated hire puts your own people on site, brings wage costs and (according to HMRC's CIS guide) usually makes the work a construction operation within CIS, so customers may make deductions. Self-drive hire is generally outside CIS, carries no labour cost but leaves the machine in someone else's hands. Lenders, insurers and your cash flow all see the difference.
CIS: the practical difference
HMRC's guide for contractors and subcontractors (CIS 340) lists plant hire with operator for use on site among the operations the Construction Industry Scheme covers, and lists delivery, repair or maintenance of construction plant or hire equipment without an operator among those it excludes. In plain terms:
| Operated hire | Self-drive (bare) hire | |
|---|---|---|
| CIS | Generally within CIS. A contractor customer deducts 20% (registered) or 30% (not registered) from the payment unless you have gross payment status. | Generally outside CIS, so paid without deductions. |
| Costs that come with it | Operator wages, travel, training and cards, holiday cover. | Minimal labour, but more wear, misuse and damage risk while the machine is out of your control. |
| What a lender sees | Part labour business, part asset business. Wage commitments and CIS deductions affect cash flow. | Purer asset business. Utilisation and damage or theft history matter more. |
| Insurance angle | Your operator is on site, so how responsibility is split with the hirer depends on your hire terms. | The hirer has day-to-day control; what they must insure and what you insure depends on your terms. |
Many hire businesses do both, and some machines go out either way. Keep the two income streams clearly separated in your invoicing and accounts: if gross payment status matters to your cash flow, losing it would hit your operated work first, and a lender reading mixed figures may not realise most of your income arrives without deductions. Check your own CIS position with your accountant or HMRC.
Your hire terms matter too
Much of the industry trades on standard model conditions for plant hire, with different versions for hire with and without an operator, while some firms use their own terms. Who must insure the machine, who is responsible for an operator's work, and what happens to hire charges when a machine breaks down or is stolen all depend on the terms that actually form part of each contract. Lenders and insurers may ask which terms you use, so make sure they're really being incorporated (on quotes, order confirmations and delivery tickets), and take legal advice if you're unsure what they say.
How do batch funding facilities for a hire fleet work?
Instead of applying for finance machine by machine, an established hire company may agree a facility with a lender: an overall limit, reviewed periodically, from which each new machine is drawn down as its own agreement or schedule. It speeds up buying and helps you plan, but every drawdown is still subject to the lender's approval and the facility can be reviewed or reduced.
Hire fleets grow and turn over in lumps: ten dumpers before the spring, a batch of excavators when a framework contract lands, a replacement round each year. Applying from scratch every time is slow and can mean several credit searches. A fleet facility (sometimes called a credit line, master agreement or umbrella facility) tries to fix that.
How a facility typically works
- The lender assesses the business once, in more depth: accounts, management figures, fleet register, finance schedule and a forecast of what you plan to buy.
- A limit is agreed, often with rules on which types of machine, new or used, maximum age and the terms available.
- You draw down machine by machine. Each purchase is documented as its own agreement or a schedule under a master agreement, with its own term and end date.
- The facility is reviewed, usually annually or when you ask for more. Your latest figures and how existing agreements have run decide whether it continues, grows or shrinks.
Things to check before you rely on one
- Is it committed? Many facilities are an indication rather than a promise: the lender can still decline a drawdown. Don't place a big order with a manufacturer assuming every machine will be funded.
- How are the agreements linked? Some master agreements let a lender treat a problem on one agreement as a problem on all of them. Know what you're signing.
- Concentration. One lender holding the whole fleet is simple, but if that lender changes its appetite for plant, your growth stalls. Some firms deliberately spread the fleet across more than one lender. A broker can talk you through the trade-off.
- Headroom for the opportunity you haven't seen yet. A facility fully used by February leaves nothing for a contract that arrives in May.
How should finance fit your fleet replacement cycle?
Decide roughly when each type of machine will leave your fleet, then set the finance so it ends at or before that point. If a machine is sold while the agreement still has a large balance, the sale price has to clear the finance first. Staggering end dates spreads replacements, and spending, across the years.
Hire companies don't keep machines until they wear out. They sell or part-exchange them while they still have a good resale value and before repair costs and downtime start eating into hire income. The point at which you do that varies by machine type and your market, but it should drive your finance, not the other way round.
Matching the term to the keep period
| If the finance ends... | What happens when you sell | Watch out for |
|---|---|---|
| Before you plan to sell | You own the machine outright for its last period on fleet and keep all of the sale proceeds. | Higher payments while the agreement runs, which the machine's hire income has to cover. |
| Around the time you plan to sell | Sale proceeds or part-exchange value go towards the next machine, with little or nothing left to settle. | Resale values move. Plan with a cautious figure, not the highest price you've seen. |
| Well after you plan to sell | The sale has to settle the outstanding balance first; if the machine is worth less than that, you make up the difference. | Rolling a shortfall into the next machine's finance makes each replacement harder to fund. |
A balloon (a larger final payment) is common in hire fleets because it lowers payments while the machine is earning and is meant to be cleared by the sale. It works when the balloon is comfortably below a realistic resale value at that age and hours. Our hire purchase vs leasing guide explains balloons and ownership in more detail.
Selling a machine that's still on finance
On hire purchase the lender owns the machine until the agreement is paid off, so you can't simply sell it. Ask the lender for a settlement figure, and make sure the agreement is settled as part of the sale or part-exchange. A buyer who knows the market will check for outstanding finance anyway.
Stagger the fleet
If you bought half your fleet in one good year, it will all want replacing in the same year. Staggering purchases, or deliberately varying terms on a batch, smooths your replacement spending and stops your borrowing need jumping all at once. Lenders reviewing a facility like to see a written replacement plan that shows this.
How does seasonal hire demand affect a hire company's finance?
Hire demand follows the construction programme and the weather, so machines come back off hire in quiet spells while payments carry on. Timing new fleet before your busy months, using quiet months for servicing and inspections, and showing lenders your monthly pattern all help. Seasonal payment profiles exist with some lenders, depending on your figures.
For a contractor, a wet winter means less work. For a hire company it means machines stacking up in the yard as customers off-hire them, with every one still carrying its finance payment, insurance and servicing. A few things specific to hire fleets:
- Time drawdowns to the season. A machine delivered just as demand drops starts its payments with nothing to earn. Agreeing finance in the quiet months but taking delivery ahead of your busy period, where the supplier and lender allow, makes a difference.
- Use the quiet months. Servicing, repairs, refurbishment and statutory inspections done while machines would be idle anyway keep them ready to earn when demand returns.
- Know which categories are seasonal. Some kit is busier at certain times of year than the rest of the fleet. Utilisation by category shows a lender which purchases are safe at any time and which need timing.
- Show the pattern. Twelve months of utilisation and income, month by month, turns a quiet winter from a warning sign into a known pattern.
How do hire contracts and debtors affect cash flow, and can invoice finance help?
Hire is usually invoiced in arrears for each hire period, and contractor customers often pay on long terms, so a growing hire company can be owed a lot while paying for new machines up front. Invoice finance advances money against those invoices. It works best when invoices are for clear, completed hire periods backed by delivery and off-hire records.
Hire income has a pattern of its own. A machine goes out on a delivery ticket, it's invoiced weekly or periodically while it's on hire, and the hire ends when the customer calls it off (you give an off-hire number) and the machine is collected. Disputes cluster around the edges: when the hire really ended, whether the machine was idle because of a breakdown, and damage, cleaning, fuel or lost-hire charges after it comes back.
What makes hire invoices easier to fund
- Signed delivery and collection records and an off-hire number for every hire that ends.
- Invoices for completed periods, raised promptly, rather than one large bill at the end of a long hire.
- Separate invoices for extras (damage, cleaning, lost or stolen kit), so a dispute over a damage charge doesn't hold up the hire income itself.
- A spread of customers. Invoice finance providers usually limit how much they'll advance against any one customer.
CIS and your customers' side of it
If you supply operated hire, customers making CIS deductions pay you less than the invoice, and the deduction only comes back to you through your company's dealings with HMRC. Invoice finance providers will want to know which invoices are subject to CIS. For your contractor customers there's a related point: HMRC's CIS 340 guide says that when a subcontractor hires plant from a third party to carry out construction work, the hire cost (and fuel for it) can be treated like materials when its own CIS deduction is worked out, while plant the subcontractor owns gets no such allowance. Clear, itemised hire invoices help your customers with that, which helps you get paid.
Don't fund the fleet from the overdraft
Using cash flow finance to put deposits on machines, or stretching asset finance to cover a slow-paying customer, mixes up two different problems. Keep fleet finance matched to machines and working capital matched to debtors. If a VAT bill is what's squeezing you, see VAT loans. Hiring out equipment is a supply of services for VAT, so the VAT on your hire invoices is part of what you owe HMRC; ask your accountant when it falls due under the scheme you use, because slow-paying customers can leave you funding it.
What about the lorries that deliver your plant?
Low-loaders, beavertails and plant wagons are financed like any commercial vehicle, but over 3.5 tonnes they usually need a goods vehicle operator's licence, and the licence needs financial standing available for every vehicle on it. Adding delivery vehicles as the fleet grows raises that figure as well as your finance commitments.
A hire fleet is only as useful as your ability to get machines to site on time. Transport is also where hire firms most often run into rules that have nothing to do with plant:
- Operator's licence. GOV.UK's licensing guide says goods vehicles over 3.5 tonnes gross plated weight used in connection with a trade or business usually need one. On a standard licence the financial standing is £8,000 for the first vehicle and £4,500 for each additional one; on a restricted licence £3,100 and £1,700. It's money that must stay available, not a fee, so a large deposit on a new low-loader can leave you short.
- Which licence type? A restricted licence covers carrying your own goods only; carrying goods for other people for payment needs a standard licence. If you also move customers' or other firms' machines for a charge, check which type fits with the licensing guide before you finance the vehicle.
- Adding vehicles is a variation. Increasing the number of HGVs on your licence means a variation application, and you need to show financial standing for the larger fleet.
Our financial standing calculator works out the figure for your vehicles, and the HGV finance guide covers financing lorries and trailers.
How does insurance for hired-out plant affect your finance?
A lender funding your fleet will expect every financed machine to be insured, usually with its interest noted, for the whole agreement, including while the machine is out on someone else's site. Your hire terms decide what the hirer must insure, but the lender's requirement is on you.
The awkward part for hire companies is that your financed machine spends most of its life in someone else's control. Points to settle with your insurer and broker:
- Cover while on hire. Check your policy covers theft and damage while machines are with hirers, not only in your yard, and what conditions (such as security or tracking) apply.
- Hirers' own cover. If your terms require hirers to insure the kit, decide how you check it, and what happens if they don't have it. Relying on a hirer's policy you've never seen leaves a gap.
- Loss of hire income. When a machine is stolen or written off, the finance payments carry on until the claim is settled. Ask what cover is available for the hire income you lose in the meantime.
- Theft history. A lender building a facility may ask about losses and claims. A clean record, trackers and immobilisers help.
Insurance is not something we can advise on; speak to an insurance broker who knows the hire industry.
What should a hire company have ready for a finance enquiry?
Your accounts and management figures, a fleet register, a finance schedule of existing agreements, utilisation by machine category, an aged debtor list, your replacement plan and details of the machines you want to buy. A hire company that can produce these quickly is far easier to fund.
- The basics: Companies House number, how long you've been trading and director details for checks.
- Figures: the last two years' accounts, current-year management accounts and recent business bank statements.
- Fleet register: every machine with make, model, year, hours, cost, and whether it's owned or financed.
- Finance schedule: each agreement's lender, balance, regular payment and end date.
- Utilisation and income by machine category, ideally month by month for the last year.
- Debtors: an aged debtor list and your largest customers, with how much of your income is operated hire subject to CIS.
- The plan: what you want to buy, when, and what it replaces or adds, plus your disposal plan for machines leaving the fleet.
Every lender makes its own decision, but this pack answers most of the questions a lender asks a hire company and shortens the process considerably.
Related guides
Plant hire finance: frequently asked questions
What is plant hire finance?
Plant hire finance is funding for plant hire companies: asset finance to build and replace a hire fleet, often through a facility you draw down machine by machine, plus cash flow finance such as invoice finance for hire income. Finance is subject to status and the lender's checks.
How is plant hire finance different from plant finance?
Plant finance is about funding a machine, whoever uses it. Plant hire finance is about funding a hire business: lenders look at fleet utilisation, the fleet's age, your replacement plan, your customers and the finance already on the fleet, not just the machine being bought.
What is a fleet finance facility?
It's an overall limit agreed with a lender after a fuller review of your business, from which you draw down individual machines as separate agreements or schedules. Each drawdown is usually still subject to the lender's approval, and the facility is reviewed periodically.
Do lenders really look at utilisation?
Lenders funding hire companies commonly ask how busy the fleet is, because idle machines still have payments due. Have your own figures by machine type over at least a year, so seasonal dips are visible in context.
Is operated plant hire covered by CIS?
HMRC's CIS 340 guide lists plant hire with operator for use on site as a construction operation within the scheme, and delivery, repair or maintenance of plant or hire equipment without an operator as excluded. Check your own position with your accountant or HMRC.
Can I sell a hire machine that's still on finance?
Not without dealing with the finance. On hire purchase the lender owns the machine until it's paid off, so get a settlement figure and settle the agreement as part of the sale or part-exchange.
Should my finance end when I plan to sell the machine?
Ending the finance at or before your planned disposal point means the sale doesn't have to clear a large balance. If the machine is worth less than what's owed when you sell, you make up the difference.
Can a hire company use invoice finance?
Often, yes. Invoices for completed hire periods, backed by delivery tickets and off-hire records, suit invoice finance. Disputed damage or lost-hire charges and heavy reliance on one customer are harder to fund.
Do I need an operator's licence for my low-loader?
Usually, if it's over 3.5 tonnes and used for your business. GOV.UK sets financial standing for a standard licence at £8,000 for the first vehicle and £4,500 for each additional one, and for a restricted licence at £3,100 and £1,700.
Do you provide plant hire finance?
No. We are an independent guide and introducer, not a lender or a broker. With your consent we pass your enquiry to one specialist commercial finance broker from our partners. We may be paid for the introduction.
Sources
We checked the facts on this page against these sources on 12 November 2026: