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Finance for Tradespeople

plumber with text 'Finance for Tradespeople'

Plumbers, electricians, and other tradespeople are often small businesses that play an important role in the UK economy. Maintaining a viable business can sometimes be a struggle and growing a business even more difficult; utilising appropriate finance for tradespeople can help. There are several different commercial finance options that may be of use to tradespeople, keep reading to find out more. 

Finance Options for Trades Businesses

Many tradespeople learn their skill as an apprentice working for a large organisation, and then branch out to form their own business. There is always demand for plumbers, electricians, gas engineers, kitchen/bathroom fitters and other trades; however, financing the start-up of such a business and then on-going costs can be prohibitive. Whether to cover start-up costs, expansion, equipment, or an unexpected expense the following types of finance are important to understand:

  • Business loan 
  • Invoice finance 
  • Asset Finance 

As a business owner it is important that you understand the financial situation of your company, and of finance options that may be available to you. However, you are the expert in your trade, and we would recommend that you seek advice from an expert in business finance to ensure that you make the best possible financial decisions for your business. Book an appointment with MC Commercial Finance to get expert advice and support to secure commercial finance as a tradesperson. 

Business Loans

One of the most well-known types of commercial finance is a business loan. Like with a personal loan, a business loan provides a cash injection into the organisation that can be used for a wide variety of purposes such as buying tools, raw materials, staffing costs, insurance, memberships, marketing, and any other business costs. The loan is repaid over a set-period of time at a set monthly amount. Benefits include the ability to use the money for a wide range of purposes, and the fixed costs allow accurate cash-flow projections and predictable costs. However, a business loan can be difficult to secure and may require a comprehensive business plan. Lenders needs to be assured that the money can be repaid, and as such lending criteria can be difficult to meet, particularly for a new business. If you have been a tradesperson for several years, with a strong financial record a business loan may be a more suitable option. 

Invoice Finance for Tradespeople

One of the most important types of commercial finance for the trades industry is invoice finance. For plumbers, electricians, gardeners, and any other people providing a service it can be difficult to scale up a business. Invoice finance is a vital tool for business growth. As a plumber or electrician, you may currently work with private individuals, undertaking smaller jobs. However, if you’d like to take on larger work such as a commercial project, you may struggle with the initial outlay required for tools, raw materials, or additional workers. Invoice finance can help you to meet these costs. 

Essentially you are loaned a sum of money against an invoice that you have raised, you can usually borrow up to 90% of the invoice value. You can use the money to enable you to complete the job, and when the invoice is paid the debt is repaid. This type of finance would enable a small tradesperson to take on a larger project and subsequently grow, taking on larger projects more frequently. There is more in-depth information about invoice finance here

Asset Finance for the Trades Industry 

A large cost for tradespeople is equipment and vehicles; there is a specific type of finance to support the purchase of these: asset finance. Asset finance is a loan to purchase vehicles and large tools or equipment that are essential for business. Most electricians need a van to visit jobs, plumbers require tools to undertake their work, and a gardener will need equipment such as a mower or hedge trimmer. All these heavy-duty, professional items are expensive to purchase and can impact cashflow to buy outright. 

There are different types of asset finance depending on what you are financing and whether you want to eventually own the item. Our dedicated asset finance page has more information. However, as a brief overview the key points of asset finance include: 

  • Finance to own or lease options
  • Fixed monthly repayment
  • Fixed contract duration 
  • Low deposit or initial contribution 
  • Secured loan
  • Competitive interest rates

Commercial Finance for Tradespeople 

Having a basic understanding of finance options puts you in charge of your business, which is vital to its success. However, as an electrician, plumber, or other tradesperson, you should seek advice from an experienced commercial finance broker. A broker will learn about your business and be able to tailor their advice to your unique circumstances. After identifying the best type of finance for the requirements of your business a broker will help you to source the best deal, and they often have access to broker only promotional rates. They can also help you to apply for the finance ensuring that the process is as speedy and hassle free as possible. Having a good broker onside is key to successful finance for tradespeople and can help to transform the fortunes of your business. 

MC Commercial Finance Ltd is authorised and regulated by the Financial Conduct Authority 
(Reg number 948719).
MC Commercial Finance Ltd is an independent credit broker not a lender.
Company Registered Number: 12472873