The resources needed for any construction project are likely to be considerable. They include the assets to which any construction company needs access. Assets such as equipment, plant, light and heavy earthmoving machinery, trucks, excavators, cranes, crushers, loaders. The list may seem endless.

Construction asset finance provides the access your business needs to these assets. Whether you are involved in public works, private development or a self-funded building project.

Let’s see how construction asset finance can work.

Access to the Assets You Need

In many cases, your access to and the right to exclusive use of the assets in question is just as important – if not more so – than outright purchase.

Therefore, we are helping clients make increasing use across the construction industry of lease agreements and hire purchase for access to the plant, machinery and equipment needed for any project.

By way of illustration, the Finance & Leasing Association (FLA) reported a 29% increase in new business in December 2018, compared to the previous year for construction asset finance such as plant and machinery by way of leases and hire purchase agreements:


Conventionally, leases have been divided into two sorts – operating leases and finance leases:

An operating lease is the more standard form of lease. You buy the right to exclusive use of the assets for the duration of the lease agreement and return the plant, machinery or equipment at the end of the lease.

A finance lease also gives you the right to exclusive use of the plant, machinery or equipment. But, at the end of the lease agreement, you may be given the option to buy the assets concerned.

Recent changes to standard accounting practices have somewhat blurred the distinction between operating and finance leases, with both now treated simply as lease agreements. International accounting consultants Deloitte, for example, explain that with effect from the 1st of January 2019 all leases are to be shown as balance sheet liabilities, expressed as the current value of all future lease payments.

Hire Purchase

Probably the most traditional form of construction asset finance is hire purchase (HP). This is a combination of both leasing or hire and eventual purchase.

How does construction HP finance work?

Typically, a deposit of around 10% of the purchase price of the asset is paid. Followed by equal monthly instalments throughout the hire purchase agreement.

On payment of the final instalment – but not before – ownership of the asset formally transfers to the customer.

Hire purchase agreements are available for all manner of construction equipment, plant and machinery. Applications and approvals are typically swift – subject, of course, to the relevant creditworthiness checks.


For some items of construction plant, machinery and equipment you may have a desire for outright purchase and ownership.

In that case, the appropriate construction asset finance may be a straight forward business loan.

Some loans are secured against the assets themselves, while some borrowing can be unsecured.

Business loans are available from banks and other traditional institutions. However, alternative finance providers are increasingly in the business of arranging mostly unsecured loans repayable over the short-term in a bid to make construction financing easy to access and flexible.