Commercial Vehicle Guide

Van Finance for a Limited Company - Director-Guaranteed and Non-Guaranteed Options

Van finance for limited companies. Director-guaranteed and non-guaranteed options, credit assessment, tax treatment and choosing the right structure.

Van Finance for a Limited Company

Financing vans through a limited company is straightforward for established businesses with clean credit and filed accounts. The company is the borrower; the finance agreement is in the company's name; and the van appears on the company's balance sheet (for HP) or as an operating lease commitment (for contract hire). VAT is reclaimed through the company's VAT return.

Director Personal Guarantees

For most small and medium limited companies, lenders require at least one director to provide a personal guarantee (PG) for company van finance. A PG makes the director personally liable if the company defaults - the lender can pursue the director's personal assets to recover the debt. For established companies with strong audited accounts and significant balance sheets, non-guaranteed facilities are available, but these are the exception rather than the rule for SMEs.

Credit Assessment for Limited Company Van Finance

Lenders assess: the company's credit file (Creditsafe, Experian Business, Companies House data); filed accounts (last 2–3 years); directors' personal credit; existing finance commitments; and the overall financial health of the business. A limited company with 3+ years of filed accounts showing consistent profitability gets the best rates.

HP vs Finance Lease for a Limited Company

Factor	HP	Finance Lease	Contract Hire
Ownership	Company at end of term	No (lender owns)	No
Capital allowances	AIA in year 1	No	No
Tax deduction	AIA + interest	Full rental	Full rental
VAT recovery	100% upfront	100% on each rental	100% on each rental
Balance sheet	On (asset + liability)	On (FRS102)	Off (operating lease)

Non-Guaranteed Van Finance - When Is It Available?

Non-guaranteed limited company van finance is available where the company has: 5+ years of profitable trading; strong balance sheet with significant net assets; existing unencumbered assets that provide the lender with comfort; clean credit with no adverse history; and a finance amount that is not material relative to the company's turnover. Most lenders set a minimum company turnover or net asset threshold for non-PG facilities.

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FAQs

Frequently asked questions

Does a limited company need a personal guarantee for van finance?

In most cases yes, especially for smaller companies and newer businesses. Directors' personal guarantees are standard for SME van finance. Established companies with strong financials and significant net assets may access non-guaranteed facilities.

Can a newly formed limited company get van finance?

Yes, but terms are more restrictive. A new company has no credit file or trading history, so lenders rely on directors' personal credit. Expect 20–30% deposit and a personal guarantee requirement. A sole trader application may be simpler for a single-van start-up.

Is it better to finance a van through a company or as a sole trader?

It depends on your tax position. A company paying corporation tax at 25% gets 25% relief on AIA claims; a sole trader paying 40% income tax gets 40% relief. However, company finance may be necessary once you are employing staff or have liability concerns. Consult your accountant.

Can the company claim VAT back on van finance?

Yes. A VAT-registered limited company reclaims 100% of the VAT on HP purchases (charged upfront) and 100% of the VAT on each rental for finance lease or contract hire, provided the van is used for business and qualifies as a commercial vehicle.

What happens if the company cannot make payments?

The lender can repossess the van (their security). If you have signed a personal guarantee, the lender can also pursue you personally for any shortfall between the sale proceeds and the outstanding debt. This is why personal guarantees should be understood fully before signing.

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Asset finance for business purposes is not regulated by the FCA. Rates shown are indicative as at October 2026 and depend on credit profile, term, vehicle and deposit. We act as a credit broker, not a lender. Your vehicle may be repossessed if you do not keep up repayments.