What Is Food Processing Equipment Finance?
Food processing equipment finance is a form of asset finance that allows UK food manufacturers, processors and producers to acquire machinery and production equipment by spreading the cost over time. Rather than paying for equipment outright - tying up working capital - businesses use hire purchase, finance lease or other structures to preserve cash flow while gaining immediate use of the asset.
Common assets financed include filling lines, packaging equipment, pasteurisers, mixing and blending systems, cutting and portioning machinery, labelling equipment, and whole production line installations.
Finance Options for Food Processing Equipment
Hire Purchase (HP)
You pay a deposit, then fixed monthly instalments over an agreed term. At the end you own the asset outright. HP allows businesses to claim capital allowances (including AIA) on the full asset value. Rates typically 5.5–11% depending on lender and profile.
Finance Lease
The lender owns the asset throughout the term; you lease it and make fixed payments. Lease payments are fully tax-deductible as a business expense. At the end of the term you may be able to extend or sell the asset on the lender's behalf and receive a rebate of rentals.
Sale & Leaseback
If you already own food processing equipment, you can sell it to a finance company and lease it back - releasing capital for working capital or other investment while retaining use of the asset.
Worked Example: £200,000 Filling Line, 5-Year HP at 7.5%
| Detail | Figure |
|---|---|
| Asset | Automated filling line (new) |
| Asset value | £200,000 |
| Deposit (10%) | £20,000 |
| Amount financed | £180,000 |
| Rate | 7.5% per annum (HP) |
| Term | 5 years (60 months) |
| Estimated monthly payment | approx. £3,596/month |
| Total cost of finance | approx. £215,760 (inc. deposit) |
| Capital allowance benefit (25% AIA on £200k) | Significant first-year tax saving |
Illustrative only. Actual rate subject to credit assessment. Consult your accountant regarding tax treatment.
Eligibility: What Lenders Look For
- Minimum 2 years trading (most lenders) - some specialist lenders consider younger businesses
- UK-registered business
- Asset used primarily for business purposes within the UK
- Last 2–3 years audited or filed accounts (management accounts for recent period)
- Evidence of trading relationship with the equipment supplier
- Directors with satisfactory personal credit histories (for smaller SMEs)
- Existing finance commitments to be declared