Welfare van finance

What a welfare van actually is

A panel van with a conversion in the back: seating, a table, a canteen area with a boiler and a microwave, charging points, and a flushing toilet with hot water. Better specified ones carry auxiliary batteries and a solar panel so the thing is not running an engine or a generator all day just to keep the kettle going.

It drives to site in the morning and drives away at the end of the day.

That makes it a different animal from a welfare unit, which is the cabin craned onto a site and left there for three months. Both have their place and we can fund either, but most of this page is about the van, because that is what this site is for.

Who buys them

Broader than people assume. Civils and highways contractors. Utilities gangs working on water, gas and power. Rail contractors on possession work. Traffic management firms. Demolition and surfacing contractors. Local authority teams. And plant hire companies, who buy them in numbers to put out on rental.

What they have in common is a workforce that moves. A fixed cabin suits a site that stays put for months. A van suits a gang that is somewhere different every few days.

Why the people buying them are usually in a hurry

Worth understanding, because it affects how quickly you need this arranged.

Welfare facilities on a construction site are not optional. Under CDM 2015 the principal contractor has to provide them from the moment work starts, and that duty cannot be passed down to a subcontractor or to whoever supplies the unit. If they are not there, the HSE can serve a notice, and in serious cases stop the work altogether.

So a welfare van is rarely a purchase made at leisure. It is usually a contractor who has won something and needs the facility in place before anybody can set foot on the site. The finance has to move at the speed of the contract rather than the other way round.

If you have won the work, bring the paperwork

This is the single most useful thing on this page, and almost nobody is told it.

A lender assessing a welfare van application is trying to work out whether the vehicle will be earning. A signed contract, a purchase order or a place on a framework answers that question in a way that nothing else does. It turns a hopeful application into a funded one, and it is worth more than almost anything else you can put in front of them.

The reverse is also true, so it is worth being straight about it. Finance requested for work that has not yet been awarded is one of the more common reasons these applications do not get anywhere. If you are buying on the expectation of winning something, expect a harder conversation, a closer look at your trading history and probably a deposit.

So if you have the contract, send it with the application rather than waiting to be asked. It changes the answer.

Buying or hiring

Most welfare vans on sites in this country are hired, and for short jobs that is the right call. You need it for three weeks, you hire it for three weeks, and somebody else worries about servicing it and emptying the tanks.

The arithmetic changes on a long scheme, or when you find you are hiring one more or less permanently. At that point the hire charges are simply a payment you are making for an asset you will never own, and buying one usually works out cheaper over the life of the work.

That is not a decision we can make for you, because it depends on how long the scheme runs and how often you would actually use the vehicle between contracts. But if you are hiring one most weeks, it is worth doing the sum.

The problem is the valuation

Most welfare vans are bought already converted. The conversion work is generally done when the vehicle is new or close to it, and those vehicles gradually make their way onto the used market, which is where a lot of businesses buy them.

So this is rarely a case of buying a van and then needing to find money for a fit-out afterwards. You are buying one vehicle, at one price, from one seller.

The difficulty is what a lender thinks that vehicle is worth.

A good many of them look at a welfare van and see a panel van. They value the base vehicle, apply their usual rules to it, and give no credit whatsoever for the canteen, the water system, the toilet, the heating and the electrics in the back, even though that work accounts for a substantial part of what you are paying. The result is an advance built on a number well below the price, and the shortfall arrives as a deposit you should never have needed to find.

We work with lenders who understand these vehicles and will lend against what one is genuinely worth rather than what the base van would fetch stripped out.

Buying from a private seller or another business is also possible, on any vehicle, provided they can prove they own it.

What a lender looks at

Briefly, because it is mostly common sense.

They want to know the facilities actually work. The water system, the heating, the toilet and its tanks, and whether anything is damp or has been patched up. A welfare van with a dead water system is not a welfare van, it is an expensive panel van with a sink in it, and the lender is securing against the former.

The usual things apply alongside that: the age of the vehicle at the end of the agreement rather than today, its condition, and the strength of the business behind the application.

The VAT, and the cash flow problem nobody mentions

This catches out more businesses than anything else here, and there is something you can do about it.

On hire purchase, which is what most businesses use when they want to own the vehicle at the end, the lender funds the price before VAT. The VAT itself is payable up front, by you, on day one.

At 20% that is a substantial sum, and if you are VAT registered you will get it back. The problem is when. If your VAT quarter has just ended, you could be three or four months away from reclaiming it, and in the meantime that money is sitting with HMRC instead of in your business.

Several of our lenders will defer it.

What that means in practice is that the lender advances the VAT for the first three months and it sits on the finance document. There is some interest on it, but nothing is payable for three months, and it is usually added on top of the third monthly payment. By then your next VAT return has been and gone, you have reclaimed the VAT from HMRC, and you use that money to settle it.

The effect is that a sizeable chunk of working capital stays in your business through the period when you are also paying for everything else a new contract demands. It is one of the more useful things a broker can arrange and a lot of businesses have never been told it exists.

If you are taking a lease rather than hire purchase, this does not arise. On a lease the VAT is charged on the payments rather than up front. If you are not sure which of the two suits you, we have compared hire purchase and finance lease separately.

New businesses

A new groundworks or civils company that needs a welfare van before it can start its first contract is a situation we see, and yes, we can usually help.

With no trading history for the business, a lender is looking at the directors instead. What carries these cases is relevant experience, meaning you have run or worked in this kind of business before rather than arriving from nowhere, together with reasonably good personal credit.

And this is exactly where the point about the contract does the most work. A brand new company with a signed contract in hand is a far more fundable proposition than a brand new company with a plan.

There is more on van finance for a new business on its own page, and the same principles apply whatever the vehicle.

If you hire them out

Plant hire companies are a significant part of this market, and the conversation is different from a contractor buying one van.

A lender funding a hire fleet is looking at how well the existing fleet is utilised, how old it is, and the quality of the customers hiring from you. The vehicle matters less than the business putting it to work.

Where it gets more practical is a block facility, which is effectively a pre-approved credit limit for adding vehicles over time rather than making a fresh application every time you buy one. If you are building a fleet rather than buying a single unit, that is usually the arrangement worth asking for, and we can put one in place.

Welfare units, as a side note

This site is about vans, so briefly.

If what you actually need is a static welfare unit, the cabin delivered and left on site, or a towable unit that goes behind a vehicle, we can arrange finance for those too. A towed unit is a separate asset from the vehicle towing it, which occasionally matters to how it is structured. commercial vehicle and asset finance covers a good deal more than vans, so talk to us and we will tell you what is realistic.

What we need and how long it takes

A few months of business bank statements and the invoice or quotation for the vehicle and the conversion. And the contract, if you have one.

It can move quickly, often within a couple of days, and what sets the pace is how fast the paperwork arrives. Given that most welfare van purchases are driven by a start date, it is worth getting that quotation to us early rather than at the point it becomes urgent.

Terms generally run up to five years, and up to six on a brand new vehicle.

What it costs

We have not put figures on this page because they move. There is a separate page on van finance rates which explains how rates are quoted and what lenders actually look at, and a finance calculator if you want an idea of monthly payments.