Haulage finance: why operators outgrow their bank
Most hauliers and logistics businesses we speak to have grown on a mix of an overdraft and hire purchase from several different funders. It works until a big contract arrives, a key customer stretches payment or fuel jumps, and then the overdraft is full and every vehicle is already financed separately. The bank sees thin margins and a sector with a high failure rate, and the limit does not move.
Good haulage finance looks at the business as a whole. Your debtor book, your fleet and your contracts are all valuable, and a lender who understands transport will lend against all three together. The result is usually more headroom, fewer funders and a structure that grows with your turnover rather than lagging it by a year.
Fleet finance and refinance
Hire purchase and finance leases remain the backbone of fleet funding for HGVs, trailers and vans, at up to 100% of the asset cost over two to seven years depending on the vehicle and how hard it works. Contract hire suits operators who want maintenance included and certainty over residual values.
Fleet refinance is the most underused option in the sector. Many operators own a large part of their fleet outright or have paid most of it off. A lender can value those vehicles independently and advance up to 85% of their net orderly liquidation value, releasing cash for growth, an acquisition or a VAT bill. It is often the quickest money available to a transport business.
From £2m, the fleet and the debtor book can sit together in one asset based lending facility: a revolving credit facility with a single borrowing base, advancing up to 90% of eligible debtors, up to 85% of fleet NOLV and up to 80% of any owned depot's market value, with fleet and property as term loans inside the facility. ABL facilities run from £2m to £120m on 3 to 5 year committed terms, priced from 2% over Bank Rate on the receivables line. New vehicles stay on separate hire purchase alongside it.
Funding the electric transition
Electric vans are now widely financed, and electric HGVs are following. They cost several times their diesel equivalents, and their resale values are still uncertain, so lenders tend to lend over shorter terms or ask for a contract that justifies the vehicle. Charging infrastructure at the depot can usually be financed alongside the vehicles. We match EV fleets to lenders who are actively building that book.
Invoice finance for hauliers and logistics firms
Invoice finance is a natural fit for transport because customers are usually substantial businesses that pay on 30 to 90 day terms. Once a delivery is complete and invoiced, a lender can advance up to 90% of the eligible invoice within 24 hours, with the balance paid when the customer settles. The facility grows as you win work, which matters when a new contract adds hundreds of thousands of pounds of fuel and wages before the first payment.
Lenders want clean proof of delivery, clear rate agreements and low levels of disputes and credit notes. Operators with good systems typically get higher advance rates and lighter reporting. Confidential invoice discounting keeps the arrangement invisible to your customers.
Freight forwarders: duty, VAT and carrier payments
Freight forwarders carry an unusual cash burden. They pay shipping lines, airlines, ports and hauliers upfront, and often pay import duty on behalf of clients through their own duty deferment account, then invoice the client later. Postponed VAT accounting has eased the VAT side for many importers, but duty and carrier costs still sit on the forwarder's balance sheet.
A combination of invoice finance against client debtors and separate trade finance, at up to 100% of supplier cost on terms of up to 180 days, or guarantee facilities usually solves this. The guarantee behind a duty deferment account or customs comprehensive guarantee can be provided by a bank or insurer, which frees the forwarder from cash deposits and lets it take on larger clients.
3PL warehousing and contract-backed lending
Third-party logistics operators win contracts that need a warehouse, racking, handling equipment and increasingly automation before the first pallet arrives. The right structure matches the funding to the contract: asset finance for racking, forklifts and automation, and a term loan for fit-out and set-up costs, all repaid over the contract term.
Lenders look at the contract itself, its length, break clauses, whether it is open-book or closed-book, and the credit quality of the customer. A long contract with a strong customer can support lending well beyond what the operator's own balance sheet would justify. The same approach works for dedicated fleets run for a single customer.
Bus and coach operator finance
Bus and coach operators have longer-lived vehicles than hauliers and a different income mix: tendered local authority routes, school and college contracts, private hire and tours, and concessionary fare reimbursement. Coaches and buses can usually be financed over longer terms than HGVs, and accessibility compliance often drives a renewal programme. Contracted public sector income is valued by lenders and can support both fleet finance and a working capital line for the gap between running the service and being paid for it.
Buying competitors, depots and operating centres
The transport sector is consolidating, and buying a competitor is often the quickest way to win customers, drivers and operating centre capacity. Acquisition finance usually combines equity released from the buyer's fleet and the combined debtor book, often in one enlarged ABL facility, with a term loan at up to 5x the enlarged group's EBITDA. We advise on the transaction and run the debt process end to end. The O-licence does not transfer with a business sale in the way many expect, so licence and operating centre arrangements need planning from the start.
Owning the depot or warehouse you depend on removes landlord risk and builds an asset. A commercial mortgage from £1m to £100m can fund up to 75% of the purchase, priced from 1% over Bank Rate over up to 25 years, and for operators who already own their site, it can be refinanced to release capital.
What makes a transport deal fundable
None of this has to be perfect before you speak to us. We pull it together into a credit paper that shows lenders how the operation really earns, so they judge your business rather than the sector's reputation.
- Monthly management accounts with margin by customer or contract
- A fleet list that matches the finance agreements and the O-licence
- Fuel surcharge or rate review terms in the main contracts
- Clean proof of delivery and low levels of disputes
- A clear compliance record with the DVSA and Traffic Commissioner