Can I refinance existing machinery to release working capital?

The short answer and how machinery refinance works

Short answer

Yes — many UK businesses can refinance existing machinery to release working capital. This is typically arranged through asset refinance or sale-and-hire-purchase-back agreements, using your equipment as security. If the assets have sufficient value and title is clear, funds can often be released within days, subject to lender checks.

What is machinery refinance?

Machinery refinance lets you unlock cash tied up in plant, tools, vehicles, and production equipment you already own. A lender values the asset and advances a percentage of that value as a secured facility. You then repay over an agreed term, while continuing to use the equipment in your business.

Two common structures are used:

• Asset Refinance: The lender takes a charge over unencumbered machinery and advances cash based on valuation.
• Sale & HP Back (or Leaseback): You sell the asset to the funder and immediately buy it back under a hire purchase or lease, freeing cash upfront.

How the process typically works

1. Initial enquiry and asset list: Make, model, year, condition, serial numbers, and any finance outstanding.
2. Valuation: Desktop or site inspection to set market or forced-sale value.
3. Offer: Indicative terms based on asset value, your trading profile, and affordability.
4. Due diligence: Title checks, settlement figures, and proof of ownership.
5. Completion and pay-out: Charges are registered, any existing finance is settled, and net funds are released.

Typical terms and security

Facilities are usually secured against the specific machinery, not your premises. Terms often range from 12 to 60 months, with fixed monthly repayments. Loan-to-value (LTV) depends on asset type, condition, and resale market — lenders may offer around 50% to 80% of current market or orderly liquidation value, but exact figures vary.

Eligibility, assets and valuations

Which assets can be refinanced?

Funders generally favour hard, identifiable assets with a known resale market. Examples include CNC machines, lathes, presses, forklifts, HGVs, tractors, excavators, telehandlers, printing presses, medical devices, commercial kitchen equipment, and production lines.

Assets should be in good working order, have clear serial numbers, and ideally be less than 10–12 years old. Older machinery can be considered if demand and condition are strong, but appetite varies by lender.

How much working capital can I release?

The advance is guided by current market value and liquidity of the kit. Where demand is deep and resale channels are strong, higher LTV may be achievable. Expect more conservative LTVs where assets are specialised, older, or costly to deinstall and resell.

Some lenders use market value; others use forced-sale value. Offers will reflect either approach, influencing the capital you can release and the rate offered.

What if equipment already has finance on it?

Refinancing is still possible. Lenders can settle the existing agreement and structure a new facility over a fresh term. This can reduce monthly outgoings, align payments to seasonality, or release surplus equity if the asset value exceeds the outstanding finance.

Where multiple agreements exist, consolidation can simplify cash flow management. The net release depends on settlement amounts versus current valuations.

Documents and checks you’ll likely need

• Asset schedule with makes, models, ages, serial numbers, and current condition.
• Proof of ownership, purchase invoices, or settlement letters if finance is outstanding.
• Last 3–6 months’ business bank statements and recent management accounts.
• Insurance details for the machinery and location information.
• VAT status and any asset-specific certificates or service records.

Sector specialisms can help. For example, agriculture and contracting firms often refinance tractors and harvest equipment; see our support for farming and rural businesses here: Farming & Agriculture Finance Options.

Costs, risks and practical considerations

What does it cost?

Pricing depends on your credit profile, asset quality and age, LTV, sector, and term. Secured asset finance often offers more competitive rates than unsecured borrowing, but costs still vary by lender and market conditions.

Typical fees may include documentation, valuation or inspection, and disbursements for title registration. Early settlement terms can involve interest rebates and fees; always check your agreement carefully.

Key risks to consider

• Security over the asset: If you miss payments, the funder could repossess the machinery.
• Depreciation and technology risk: Fast-moving tech can lose value quickly, reducing residual equity.
• Utilisation impact: If the asset is critical to operations, ensure the repayment profile aligns with revenue generated by its use.
• Balloon payments: Some structures include a final payment; plan cash flow to meet it comfortably.

When refinancing makes sense

• You need working capital quickly without diluting ownership or securing property.
• Your machinery has meaningful equity and a predictable resale market.
• You want to restructure multiple asset payments into one, or extend term to smooth cash flow.

When to think twice

• Assets are near end-of-life, obsolete, or costly to resell.
• Repayments would strain cash flow in a downturn or seasonal lull.
• The working capital use-case does not generate enough return to outweigh costs.

Example use-cases

Manufacturers unlock cash to buy raw materials at a discount, improving margins. Construction firms release capital to cover payroll and retentions while waiting on staged payments. Food processors refinance lines to fund an energy-efficiency upgrade that cuts ongoing costs.

In each case, the goal is the same: convert idle equity into productive working capital that supports growth or stabilises cash flow.

Alternatives if machinery refinance isn’t the best fit

Invoice finance (factoring or discounting)

If most of your cash is tied up in receivables, invoice finance can advance a percentage of approved invoices, typically within 24–48 hours of issue. This can scale with sales and may complement or reduce the need for asset refinance.

Revolving credit and term-based cash flow loans

For short, recurrent needs, a revolving facility can be efficient — draw, repay, and redraw within limits. For defined projects, a fixed-term unsecured or partially secured business loan may be simpler, though pricing may be higher than asset-backed options.

Asset-based lending and stock finance

Larger firms sometimes combine receivables, inventory, and plant into a single borrowing base. If inventory turnover is strong and auditable, stock finance can release cash without locking up equipment.

Government-backed options

Depending on eligibility and timing, national schemes such as the Growth Guarantee Scheme can support lending for viable UK businesses. Availability, criteria, and accredited providers change over time, so professional guidance can help you navigate current options.

Which route is right for me?

The “best” choice depends on where your value is trapped and how repayments fit your cash cycle. Many firms blend solutions — for example, machinery refinance for a one-off release plus invoice finance for ongoing liquidity.

Our role is to help you compare these paths and speak to providers who actively lend in your sector, so you can make an informed decision.

Get matched to lenders, FAQs and key takeaways

How Best Business Loans helps

BestBusinessLoans.ai is an independent introducer that helps UK companies explore relevant finance providers — we’re not a lender and we don’t give financial advice. Our AI-powered platform streamlines the search and introduces you to lenders or brokers who may assist with machinery refinance or alternatives.

Our matching process

1. Complete a Quick Quote on our site — it takes a couple of minutes.
2. Our system analyses your profile and asset details against lender criteria.
3. We introduce you to suitable providers to discuss terms and next steps.
4. You compare options and proceed only if it’s right for your business.

It’s free to enquire, with no obligation to proceed. You stay in full control of your decision.

FAQs

How quickly can funds be released?

Simple cases can complete in as little as 3–10 working days once valuations, title checks, and documents are in place. Complex assets or multiple sites may take longer.

Will I lose access to my machinery?

No — you continue using the equipment in day-to-day operations. However, the lender will hold security over the asset until you settle the agreement.

Can I refinance partly encumbered assets?

Yes, subject to settlement of existing finance and available equity. The funder can pay off the old agreement and structure a new facility if the valuation supports it.

Do I need a personal guarantee?

This depends on the lender, structure, and your business profile. Many asset-backed facilities rely primarily on the machinery security, but PGs may still be requested.

What about seasonal businesses?

Some providers offer seasonal payment profiles that step up and down through the year. This can suit agriculture, construction, and tourism-related operations.

Key takeaways

• You can refinance existing machinery to unlock working capital, subject to valuation and due diligence.
• Common routes include asset refinance and sale-&-HP-back, with repayment terms typically 12–60 months.
• LTVs vary by asset type, age, and liquidity; stronger resale markets usually support higher advances.
• Consider total cost, operational impact, and repayment resilience before proceeding.
• If machinery refinance isn’t ideal, explore invoice finance, revolving credit, or blended solutions.

Important information and compliance notice

Best Business Loans is an independent introducer platform. We do not provide loans directly, and we do not offer financial, legal, tax, or investment advice. Any introductions are made to third-party lenders or brokers who will assess eligibility and terms.

All finance is subject to status, affordability, asset suitability, and lender criteria. Security may be required. Non-payment can lead to repossession of secured assets. Terms, conditions, and fees apply. Information on this page is for UK businesses and general guidance only, and may change without notice.

Please ensure any decision is based on your circumstances and, where appropriate, seek professional advice.

Next step: Want to see what you might qualify for? Visit our homepage to start your Quick Quote. It’s fast, secure, and obligation-free.

Updated: October 2025

About the author: This guide was prepared by the Best Business Loans content team, drawing on practical experience across asset finance, cash flow funding, and UK SME lending. We regularly review guidance from the FCA, British Business Bank, and UK Government to keep our resources current and helpful for established trading businesses.