Working capital released
£40,000
Total finance facility
£132,000 (including settlement of three existing HP agreements)
Assets refinanced
Hydrema dumper, two CAT excavators
Sector
Plant hire and quarrying
Location
Glasgow area
New term
60 months (consolidated from three separate agreements)
Outcome
Lower monthly payment than before; £40,000 to fund materials contract

The business

The client ran a plant hire business alongside a small rural quarry near Glasgow, providing plant and operator for hire with a particular focus on landscaping work on large private estates. It was a father and son operation, with a third generation due to join the business within the year.

The situation

The business had accepted a significant landscaping contract for a longstanding high-profile client. Following a difficult winter, cashflow was already under pressure. The materials cost for the job was going to run to around £45,000, and that needed to be covered before the client would pay. Asking for payment upfront was not an option. The owner called Martin instead.

The asset inspection

Martin met with the owner and his son and visited their main yard, where he inspected a Hydrema dumper and a smaller CAT excavator. He then travelled to the quarry to inspect a larger CAT excavator. All three assets were currently under existing hire purchase agreements.

Through the conversation it became clear that the preferred outcome was not simply to raise the £40,000 needed for the job. The owners also wanted to consolidate the three existing HP agreements into a single facility and extend the term to 60 months.

The numbers

The total finance requirement came to £132,000: the settlement amounts on the three existing agreements combined with the £40,000 cash needed for the contract. Spread over 60 months, the new monthly payment was lower than the combined payments the business had previously been making across the three separate agreements.

Martin was transparent that a longer term means more interest paid overall. But the reduction in monthly cashflow pressure was the right decision for this business: it gave them room to breathe, room to grow, and as it turned out, room to absorb the cost of the third generation joining the business that same summer.

The outcome

Three existing HP agreements settled and consolidated into one. £40,000 released to fund the contract. Monthly payments reduced despite a larger overall balance.

The client had, before calling Martin, walked into the bank his family had used for over 40 years to ask about a business loan. He was handed a card with a phone number and reached a call centre menu system. He did not pursue it. A phone call to Martin delivered a solution within the week.

Frequently asked questions

These answers are general information only, based on common scenarios. Your own situation will differ — speak to Martin directly for advice that fits your business.

Can plant hire equipment such as excavators and dumpers be refinanced?

Yes. Excavators, dumpers, loading shovels and most other plant hire equipment can be refinanced. Lenders will assess the age, hours worked, condition and current market value of each machine. Specialist plant tends to have a smaller resale market, which affects the value lenders will advance, but an experienced broker will know which lenders are active in the plant and construction sector.

Can refinance be used to consolidate several existing HP agreements?

Yes, and this is a common reason businesses approach a broker. Multiple HP agreements, often with different end dates, rates and lenders, can be settled and replaced with a single refinance facility. This simplifies cash flow management and can significantly reduce the total monthly outgoing, even where the overall balance is larger.

Can refinance raise working capital at the same time as settling existing agreements?

Yes. Where the assets are worth more than the outstanding balances on existing agreements, a refinance can be structured to settle those agreements and release additional capital at the same time. The amount available depends on the current market value of the assets and the lender's advance rate.

Does a longer repayment term mean I pay more overall?

Yes, extending the repayment period will generally mean more interest paid in total. However, a lower monthly payment can provide the cashflow headroom a business needs to take on new contracts, cover seasonal variation or simply manage the business with less financial pressure. A broker will set out the full cost clearly so you can make an informed decision.

Can I refinance equipment that is still on an active HP agreement?

Yes. If the machine has sufficient equity — the difference between its current market value and the outstanding settlement figure — it can be refinanced. The new facility settles the existing HP and advances the remainder. The process is handled by the broker and lender and does not require you to pay the settlement yourself before the refinance completes.

What information does a lender need to assess plant hire assets?

Lenders typically want to know the make, model and year of each machine, the current hours on the clock, service history, and confirmation of ownership. Photographs of the assets are usually required. An experienced broker will gather this information efficiently and present it in the format each lender prefers, reducing the back-and-forth that can slow an application down.
Martin Mackenzie
About the author
Martin Mackenzie
Director, Mackenzie Commercial Finance. Asset finance specialist with 20+ years in commercial banking and asset finance, including experience with Bank of Scotland and Close Brothers Asset Finance. Based in Inverness, working with businesses across Scotland.