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Starting a new business is an exciting step forward. You’re ready to take on new challenges and bring your ideas to life. One of the first decisions you’ll face is how to secure a van for your business. Leasing a van can be a smart choice because it offers flexibility and keeps your cash flow steady.
However, the leasing process and requirements can be unclear for new entrepreneurs, and you don’t want any surprises. This guide to new business van leasing explains the process simply. We’ll cover the key points so you understand how it works and can make an informed decision. The goal is to help you avoid any setbacks and focus on growing your business.
Let’s get started.
Yes, you can lease a van as a new business, and at VanLeasing.com, we specialise in helping new businesses secure the right vehicle for their needs. We understand that new businesses may face some challenges when it comes to leasing, but with our expertise, we make the process simpler and more accessible.
Leasing a van as a new limited company or sole trader can present some unique challenges, but it’s possible with the right approach. While finance companies often prefer established businesses due to their longer track record, new businesses can still successfully secure a lease. Many lenders, like us, recognise the potential in new businesses and are willing to work with them, although the terms may be slightly different to account for the shorter financial history.
New businesses may find that their leasing options are more limited compared to established companies, but there are still plenty of opportunities to secure the right vehicle. Lenders offering van finance for new business owners may propose slightly higher monthly payments or shorter lease periods to manage the perceived risk. However, with the right planning and support, these terms can be managed effectively, making leasing a viable and flexible option.
While you may need to adjust the vehicle features or lease length to match your budget, these adjustments allow you to secure the right vehicle for your operations without compromising your business’s growth potential. With careful planning and a knowledgeable leasing partner, these terms are manageable, helping you access reliable transportation while supporting your long-term success.
• Shorter lease periods: While the typical lease term is 4-5 years, lenders may offer a shorter term to help manage risk. Although this can result in slightly higher monthly payments, it provides new businesses with the flexibility to upgrade or reassess their vehicle needs sooner, supporting long-term growth and adaptability.
• Lower or no balloon payment: Some leases include a balloon payment at the end, which you can either pay or cover by selling the vehicle to a third party. If you sell the vehicle, you may keep any proceeds from the sale. To reduce their risk, lenders may lower the balloon amount or ask for the full lease to be paid off during the term, effectively removing the balloon payment. While this doesn’t change the overall cost of the vehicle, it means you are paying off more of the vehicle during the lease, which can help you retain more, or even all, of the vehicle’s equity by the end of the term. On a month-by-month basis, this change can increase your monthly payments, which may also impact your cash flow.
• Higher upfront costs: While many online ads advertise “zero upfront” deals, these are usually not available to new businesses or sole traders. You can typically expect to pay at least 10% of the vehicle’s list price as an initial rental. This upfront payment demonstrates your commitment to the lease and helps lower the lender’s risk.
So in short, leasing a van for a new business is possible, but it may come with additional considerations.
For more on how costs and creditworthiness affect leasing, check out our guide on factors affecting van leasing costs, where we cover upfront payments in more detail.
Determining whether a business is considered “new” or has moved past that stage is somewhat subjective. However, in the eyes of the lease provider, it would generally depend on when your accounts are lodged with the government-run Companies House database.
Many providers look for at least two years of lodged accounts before they consider a business “established,” meaning it typically takes 2 to 3 years of trading to move beyond the ‘new business’ tag.
Let’s break this down further to explain what it means for you, depending on whether you are a newly established limited company or a sole trader.
From the time you incorporate your new limited company to lodging your first set of accounts with Companies House, it can take up to 21 months.
During this period, your business is in a kind of limbo, where you’re working to establish operations, but official records aren’t yet in place to fully demonstrate your financial stability.
Despite this, you may still need a vehicle to start trading and begin earning revenue, which can make securing financing more challenging. This critical phase presents challenges that can significantly impact whether a new business thrives or fails.
Did you know? One in five new businesses fail within their first year, and by the third year, 60% have closed their doors. Furthermore, just 33% of small businesses survive beyond the decade mark. [source]
While some lenders offer vehicle leasing to new companies during this transitional phase, even without a full set of accounts, they typically require additional documentation to evaluate your business’s potential.
To strengthen your application, you may be asked to provide the following documents:
Additional information, such as evidence of relevant experience in a previous role, can further support your application. For instance, if you have worked as an electrician for five years and are now starting your own electrical business, providing evidence of that employment would be beneficial. It demonstrates your industry expertise and shows that you have the skills and knowledge required to run a successful business.
A sole trader business structure is simpler than that of a limited company, but the process for securing van leasing is quite similar. While the documentation requirements for sole traders are generally less complex, you will still need to provide proof of trading. In most cases, funders will ask for:
Unlike a limited company, sole traders do not need to provide management accounts in as much detail, as the expectation is that sole traders typically operate with simpler financial records.
Additionally, a director’s guarantee is not required because a sole trader is an individual, not a company with directors. However, providing evidence of your trading history or industry experience can still strengthen your application and help demonstrate your ability to manage the lease.
| Document | New Limited Companies | Sole Traders |
| Business Bank Statements | Last 3 months | Last 3 months |
| Management Accounts | Yes | Not required |
| Proof of Income | N/A | Proof of income and ongoing trading |
| Director’s Personal Guarantee | Yes | N/A |
| Proof of Identification | Yes | Yes |
Yes, personal credit history is relevant for business leasing agreements, especially for new businesses. Since there is limited financial history for the company, finance companies often turn to the business owner’s personal credit history as a primary factor in determining eligibility for a lease. This helps lenders assess the risk involved with leasing to a new business.
Several factors in your personal credit history can influence your chances of being approved for leasing:
In short, a strong personal credit history can significantly improve your chances of securing a lease for your new business.
Van leasing for new businesses comes with both benefits and drawbacks. It’s crucial to carefully consider these factors to determine whether leasing is the best option for your business’s needs.
While it’s true that new businesses may face higher costs and fewer leasing options compared to established companies, that doesn’t mean leasing a van is off the table. There are still significant advantages for new businesses looking to lease.
As we touched on, for new businesses, one of the biggest hurdles is often the lack of a strong credit history or financial track record. Leasing allows new business owners to access the vehicles they need without needing the lengthy history that traditional financing requires. While lenders may check personal credit scores, they are more likely to work with new businesses if the business owner has a solid personal financial record, even if the business itself is in its infancy.
Leasing also provides an excellent opportunity to build a positive relationship with the lender. By making timely lease payments, new business owners can begin to establish a track record of financial responsibility. This can be a crucial step toward securing other forms of business financing in the future, such as business loans or lines of credit. A strong leasing history demonstrates your ability to manage credit, which can make it easier to secure better terms for future financing needs.
• Build trust with lenders through timely payments.
• Access to a vehicle even with limited credit thanks to personal financial records.
• Predictable fixed monthly payments help manage cash flow and budgeting.
• Higher monthly payments are still more affordable than purchasing a vehicle outright.
In many cases, leasing a commercial vehicle for a new business means you won’t own the vehicle outright at the end of the contract. You are usually locked into a fixed lease term, typically ranging from 2 to 5 years, which can be less flexible than owning a vehicle that you can buy or sell as your business needs change. This lack of flexibility can become an issue if the vehicle no longer meets your requirements or if your business grows or shifts, requiring a different type of vehicle.
• No option to own the vehicle at the end of the contract.
• Higher monthly payments.
• Stuck with a vehicle that may no longer be fit for purpose.
• Expect 10% of the vehicle list price as the minimum Initial Rental.
• Limited vehicle choice due to restrictions.
As a lease provider, we strive to treat every application as fairly as possible. However, it’s important to recognise that the type of business can play a significant role in a lender’s decision to offer a lease. While every application is evaluated on its merits, some industries are viewed more favourably than others due to factors like financial stability, demand for services, and the skill sets involved.
Typically, skilled trades or highly skilled professional services are seen more favourably by funders. This is not to say that other businesses are disregarded, but industries requiring years of training and experience, such as electricians, heating engineers, carpenters, and construction companies, are often considered lower risk. These businesses operate in sectors with high demand and stable income potential, making them more attractive to lenders.
On the other hand, businesses that rely on transport or driving as their primary service, such as courier or delivery companies, may face more challenges when applying for a lease. These businesses are often seen as higher risk, as their income can be more unpredictable, and the demand for their services may fluctuate more.
While these trends are common, they aren’t rigid rules—many factors influence each leasing decision, and each application is considered on a case-by-case basis. However, understanding these preferences can help new business owners set realistic expectations when applying for a van lease.
Leasing can be a bittersweet experience. You may start by worrying that no one will consider your business, only to find that some lenders are willing to work with you—only to later realise that the lease terms are unaffordable due to your company’s limited cash flow and young financial history.
What’s even more frustrating is when the monthly lease payments are just slightly beyond your budget, leaving you wishing there was an alternative for a vehicle that’s a little more affordable.
We understand the emotional rollercoaster of leasing, which is why we’ve introduced our used van leasing service. With lower monthly payments than leasing a new van, it offers a cost-effective solution for businesses and individuals looking to cut expenses while still enjoying reliable transportation. Each van undergoes a thorough 32-point health check and comes with a full-service history, reflecting our unwavering commitment to quality and reliability.
Q1. What is a balloon payment?
In the case of a vehicle lease, the balloon payment is the remaining value of the vehicle that hasn’t been covered by your monthly payments. At the end of the lease, you can either pay this amount in full or cover it by selling the vehicle. While this can keep your monthly payments lower, it’s important to plan for this large payment at the end of the term.
Q2. What happens if my business fails or I can’t keep up with the van lease payments?
If your business fails or you’re unable to keep up with the van lease payments, the outcome will depend on the type of lease you have. For a finance lease, the leasing company may allow you to sell the van to a third party to cover the remaining balance. If the sale price doesn’t fully cover the outstanding amount, you will be responsible for paying the difference. On the other hand, with contract hire, if you’re unable to make payments, you would need to contact the leasing provider to request an early settlement figure, which is typically a percentage of the remaining rental payments. In either case, it’s essential to engage with the leasing company as soon as you face financial difficulties. By being proactive, they are likely to be more willing to help reduce your obligations and find a solution to avoid further complications.
Q3. Can I lease a van for a short-term period as a new business?
Yes, you can lease a van for a short-term period as a new business. Short-term leasing is often viewed as a less risky option by finance companies, as you’re only committing to a shorter payment period. Typically, short-term leases range from 12 to 24 months. However, if you’re considering a lease term of 3 to 6 months, this is more akin to a vehicle hire rather than a lease, and as such, the monthly cost is likely to be higher than a traditional lease. It’s important to discuss your specific needs with the leasing provider to find the best option for your business.
Q4. Is a lower monthly cost the best indicator of a good lease for my new business?
Surprisingly, no! While a cheaper monthly cost may seem appealing, it isn’t always the best indicator of a good lease for a new business. Focusing solely on the lowest monthly rental can often lead to terms that lack flexibility, especially if you need to adjust the lease or exit it early. For example, a lease with a lower monthly cost may come with more rigid terms that make it harder to settle or end the lease before the agreed term. On the other hand, opting for a slightly higher monthly payment on a lease with more flexibility—such as the option to end the lease or upgrade the vehicle after a few years—could better suit your long-term business needs. Therefore, it’s important to consider the full terms of the lease, including flexibility, early termination options, and any additional fees, before making a decision based solely on monthly costs.