Is a deposit required, and how much might it be?
Short answer — clear and quick
Some business finance products require a deposit, while others do not. The size of any deposit depends on the product type, the lender’s risk appetite, the asset being financed and your business credit profile.
If you need a fast, tailored estimate for your circumstance, submit a Quick Quote and our AI matching will suggest lenders and brokers who can confirm likely deposit requirements.
When deposits are commonly required
Secured asset finance and equipment purchases
Many forms of asset and equipment finance ask for a deposit or initial payment, particularly when lenders want to reduce their exposure. Typical deposits for new equipment can range from 0% to 30% depending on the asset and lender policies.
High-value or specialist machinery often attracts higher deposits because resale value and market demand affect the lender’s recovery position.
Vehicle and fleet finance
Vehicle and fleet finance commonly allow lower deposits, sometimes from 0% for commercial vehicles for established businesses. However, better rates and terms usually follow higher initial deposits or stronger business financials.
Unsecured working capital and cashflow loans
Unsecured loans and overdrafts typically don’t require a deposit, but they may need personal guarantees, higher interest, or stricter covenants. Invoice finance and factoring release cash against invoices without a cash deposit, but they carry fees and a portion retained as reserve.
How lenders set deposit amounts
Risk profile and credit history
Lenders assess the borrower’s credit history, profitability, and sector risks to decide deposit levels. A stronger credit profile usually means a lower deposit requirement or more competitive rates.
Loan-to-value (LTV) and asset type
Deposit requirements are often a function of loan-to-value (LTV). For asset finance, lenders calculate LTV as a percentage of the asset’s purchase price and adjust deposits so their risk is covered.
For example, a lender offering 80% LTV on machinery implies a 20% deposit, subject to other underwriting checks.
Market and residual value
If an asset holds strong resale value (for instance standard vans), lenders accept smaller deposits. For niche, rapidly depreciating or bespoke assets, deposits rise to offset uncertain resale values.
Typical deposit ranges by finance type
Equipment and asset finance
Common deposit range: 0%–30%. For mainstream equipment the norm is 10%–20% where the lender feels confident about residual values. Specialist equipment or second-hand machinery can push deposits to 25%–40% in some cases.
Commercial vehicle finance
Common deposit range: 0%–25%. Established businesses with good accounts may secure 0% deposit offers, while smaller operators may be asked for 10%–20% to reach acceptable LTV.
Invoice finance and merchant cash advance
Common deposit range: typically none, but expect fees and held reserves. Invoice finance releases money against unpaid invoices and keeps a portion as a reserve rather than requiring an upfront deposit.
Refinance and consolidation
Common deposit range: depends on restructuring; sometimes none. Refinance deals that consolidate secured facilities may require a capital injection if outstanding LTV is high.
Factors that can reduce or replace a cash deposit
Trade-in, part-exchange or vendor contributions
Some lenders accept trade-ins or vendor contributions as a form of deposit when you replace equipment or vehicles. Part-exchange reduces cash outlay and can be attractive for fast replacements.
Structured finance and residuals
Finance packages such as hire purchase or finance lease may structure payments and residuals to lower upfront deposit needs. Manufacturers’ finance schemes sometimes offer 0% upfront with higher monthly payments.
Security and personal guarantees
Providing additional security or director personal guarantees can reduce the required cash deposit. Lenders often accept alternative guarantees where tangible assets or guarantees improve recoverability.
Credit insurance and third-party guarantees
Credit insurance or backing from a guarantor can reduce deposit demands, particularly in trade finance. Brokers often negotiate these arrangements to achieve better upfront terms.
Practical steps to estimate and minimise deposit needs
1. Clarify the finance product and lender expectations
Different products have different norms for deposits, so start by identifying whether you need hire purchase, lease, asset refinance, or an unsecured facility. Knowing the product narrows expected deposit ranges quickly.
2. Gather your financial information
Lenders will review accounts, cashflow forecasts and trading history; stronger documentation often means a lower deposit or better terms. Prepare recent management accounts, aged debtor lists and asset invoices.
3. Use broker or platform matching to test options
Best Business Loans helps you match to lenders and brokers who are actively lending to your sector. Our AI matches lenders based on your business profile to reduce time and surface realistic deposit expectations.
For example, if you’re financing plant or machinery, our platform can route your enquiry to equipment specialists — learn more about equipment finance here: Equipment finance options.
4. Negotiate deposit alternatives
Consider part-exchange, residual guarantees, or staged payments to reduce upfront cash. Experienced brokers can negotiate manufacturer incentives or deposit waivers as part of the overall package.
5. Get a Quick Quote for an indicative view
Submit a Quick Quote to receive an eligibility check and indication of deposit expectations from lenders and brokers in our network. This is a free, no-obligation way to understand likely cash requirements before you commit to purchase or application.
Final compliance note and how we work
Best Business Loans is an independent introducer and does not provide loans directly. We connect UK businesses with lenders and brokers who assess deposit requirements based on their own criteria.
We are not authorised by the Financial Conduct Authority to provide regulated consumer credit advice. We aim to present clear, fair and non-misleading information to help you make an informed decision.
Key takeaways
- Deposit requirements vary by product: secured asset finance and specialist equipment often need a deposit; unsecured facilities may not.
- Typical deposit ranges: equipment 0%–30%, vehicles 0%–25%, invoice finance usually none but with fees and reserves.
- Stronger credit, trade-ins, guarantees and manufacturer schemes can reduce or replace cash deposits.
- Use a Quick Quote to get matched to lenders and brokers who will provide realistic deposit estimates for your situation.
Ready to check deposit expectations for your business?
Complete our Quick Quote to get a fast, tailored eligibility check and an indicative view of potential deposit requirements. It’s free, confidential and helps you compare realistic options before you commit.
Start your Quick Quote now and see which lenders or brokers match your needs.
About Best Business Loans
Best Business Loans uses AI-driven matching combined with a network of UK lenders and brokers to help established businesses find suitable finance. We do not lend money ourselves and operate as an independent introducer.
If you need help before submitting a Quick Quote, our UK support team can guide you via hello@bestbusinessloans.ai.