Can I use a business loan to buy equipment?

2 min read

YesWorking capital can fund kit

Asset financeOften better for big-ticket kit

LifespanMatch the finance to the kit's life

When a working-capital loan fits

A working-capital loan or facility is well suited to smaller equipment, fit-out items, or kit you need fast and want to own immediately — a few laptops, a coffee machine, hand tools, a modest piece of catering equipment. You borrow, buy it outright, and repay from trading. Because the money is flexible, you are not tied to financing one specific asset, which is useful when a purchase is part of a broader spend. See what you can use a business loan for.

When asset finance is the better fit

For larger, long-life equipment — machinery, a commercial oven, a CNC machine, plant — asset finance usually fits better. It is secured against the equipment itself and spread over the kit's useful life, so the repayments line up with the years of value the asset delivers. Because the lender holds security in the asset, pricing can be keener than unsecured borrowing for the same amount. Hire purchase and leasing sit within this family, differing in whether you own the kit at the end.

Owning sooner versus spreading the cost

The trade-off is ownership and flexibility against cost and term. A working-capital loan gives you outright ownership straight away and freedom over how the funds are used, but for a large asset it can be a heavier monthly load over a shorter term. Asset finance spreads a big purchase over its working life and is secured on the kit, which suits long-life machinery — but it ties the finance to that specific asset. Weigh the monthly cost of each with the true cost of borrowing calculator.

What this means for your company

If the equipment is modest, or you want it owned and paid off quickly as part of wider spending, a Credicorp working-capital loan or facility is a clean route. Credicorp lends to the UK limited company itself and takes no personal guarantee. If you are buying substantial, long-life machinery, it is worth comparing dedicated asset finance, which may be cheaper over the asset's life. Match the finance to the kit: short borrowing for short-life items, longer arrangements for equipment that earns its keep for years.

Frequently asked questions

Is a business loan or asset finance cheaper for equipment?

For large, long-life kit, asset finance is often cheaper because it is secured against the equipment. For smaller items bought quickly, a working-capital loan can be simpler and the cost difference smaller. Compare the monthly cost of each before deciding.

Can I buy second-hand equipment with a business loan?

Yes. A working-capital loan is flexible, so it can fund used kit a supplier or asset lender might not finance directly. Just make sure the cost is justified by the value and working life the equipment will deliver.

Do I own the equipment if I use a working-capital loan?

Yes — you buy it outright and own it from day one, with the loan repaid separately. That differs from leasing, and from hire purchase, where ownership transfers only after the final payment.