Simple hacks to fund the equipment your business needs

Funding Equipment Without Draining Your Bank Account

Asset acquisition finance lets you spread the cost of equipment, vehicles, or machinery over time instead of paying the full amount upfront. You keep your working capital available for wages, stock, and unexpected costs while the equipment starts generating income from day one.

Consider a tradie buying a $65,000 excavator. Paying cash empties the business account and leaves nothing for the next job's materials or a vehicle breakdown. Financing that excavator means a monthly repayment you can budget for, while the machine earns its keep on site. The equipment itself secures the loan, so lenders focus on how the asset will generate income rather than just your tax returns from two years ago.

What Can You Actually Finance?

Most income-generating equipment qualifies for asset finance. That includes work vehicles like utes and vans, factory machinery, medical and dental equipment, hospitality fit-outs, construction gear, and technology hardware. If the asset has a clear resale value and contributes to your business revenue, a lender will consider it.

You can finance new or used equipment. Lenders typically fund assets up to 10 years old, depending on type. A truck or trailer might be financed at 15 years old if it's well maintained, while technology equipment usually needs to be newer because it loses value faster. Agricultural equipment like tractors, harvesters, and irrigation systems are commonly financed, as are specialised items like cranes, graders, and dozers for civil contractors.

How a Chattel Mortgage Works for Most Business Owners

A chattel mortgage is the most common structure for self-employed operators buying equipment. You own the asset from day one, the lender holds security over it, and you make fixed monthly repayments over an agreed term, usually between two and seven years.

At the end of the loan, you can include a balloon payment. That's a lump sum due at the finish, which reduces your monthly repayments during the term. The balloon is typically set between 10% and 50% of the original loan amount. When the balloon is due, you can pay it out, refinance it, or sell the asset and use the proceeds to clear the debt. This structure suits businesses with seasonal income or those planning to upgrade equipment on a regular cycle.

The GST on the purchase price is claimable upfront if you're registered for GST. You also claim depreciation and the interest portion of each repayment as a tax deduction. The asset appears on your balance sheet because you own it, which matters if you're building equity in the business.

Hire Purchase When Cash Flow is Tight

Hire purchase works differently. The lender owns the equipment until the final payment is made. You use it, maintain it, and make regular repayments, but ownership only transfers once the loan is fully paid. There's no balloon payment option, and the monthly repayments are usually higher because the term is often shorter.

This structure suits businesses that want full ownership at the end without a large lump sum due. It can also work when your accountant advises against showing the asset on your balance sheet during the loan term. The GST is claimed as part of each repayment rather than upfront, which spreads the benefit but delays the cash flow advantage.

Leasing If You Upgrade Equipment Regularly

A finance lease means the lender owns the equipment for the life of the lease. You make regular payments, claim the full repayment amount as a tax deduction, and the asset stays off your balance sheet. At the end of the term, you can return the equipment, upgrade to something newer, or purchase it at a residual value set at the start.

This structure suits industries where technology or machinery moves quickly. Think medical practices upgrading diagnostic equipment every three years, or hospitality venues replacing kitchen fit-outs to stay current. You're not locked into ownership, and the upgrade cycle is built into the arrangement.

An operating lease works similarly but is designed for businesses that want to use equipment for a set period without any intention of owning it. At the end of the lease, you hand it back or extend the term. Monthly payments can include maintenance, which suits fleet vehicles or office equipment where servicing costs add up.

Vendor Finance and Dealer Offers

Some equipment suppliers offer vendor finance directly. You arrange funding at the point of sale, often with faster approval because the supplier has a relationship with the lender. This can work well when buying from large manufacturers or dealerships that want to make the sale happen quickly.

Dealer finance is convenient but not always the most suitable option for your business. Rates and terms vary widely, and the dealer's preferred lender might not suit your cash flow or tax situation. Comparing dealer offers against what an asset finance broker can arrange from multiple lenders often uncovers a more suitable deal.

How Lenders Assess Self-Employed Applicants

Lenders want to see that your business can service the repayments and that the equipment will contribute to revenue. For self-employed applicants, that usually means providing recent business activity statements, bank statements showing turnover and expenses, and an ABN that's been active for at least 12 months.

Some lenders offer low doc options if your tax returns are still being finalised or your business structure makes standard documentation difficult. You might provide more bank statements or a declaration of income instead. The asset itself is the main security, so lenders are often more flexible with documentation than they would be for an unsecured loan.

Credit history matters, but it's not the only factor. A strong business cash flow and a clear plan for how the equipment will generate income can offset a less-than-perfect credit file. Lenders look at the whole picture, not just a single score.

Deposit Requirements and Loan Amounts

Most lenders require a deposit between 10% and 20% of the equipment cost. Some will finance up to 100% if the asset is new, high-value, and from a reputable supplier. The loan amount depends on the type of equipment, its age, and your business's financial position.

If you're buying used machinery, expect a higher deposit requirement. The lender's risk increases because the resale value is harder to predict. A 20% deposit is standard for plant and machinery that's already done a few years of work.

Tax Treatment and Depreciation

The ATO lets you claim depreciation on equipment you own. The rate depends on the asset type and how long it's expected to last. Some items qualify for instant asset write-off, which means you can deduct the full cost in the year you buy it, subject to the current threshold.

With a chattel mortgage, you claim depreciation each year plus the interest portion of your repayments. With a finance lease, the full repayment is deductible, but you don't claim depreciation because you don't own the asset. Your accountant will tell you which structure delivers the most benefit based on your business's profit and tax position.

When to Consider a Balloon Payment

A balloon payment makes sense if your business has lumpy income or if you plan to sell or trade the equipment before the loan term ends. It lowers your monthly repayments, which helps manage cash flow during quieter months. When the balloon is due, you can refinance it if the business is still using the equipment, or sell the asset and clear the debt.

In our experience, contractors with seasonal work use balloons to reduce repayments during winter, then pay the balloon from summer earnings. Others use the balloon as a built-in upgrade point. When it's due, they trade the equipment for something newer and roll the balloon into the next finance agreement.

Be realistic about whether you'll have the funds to pay the balloon when it's due. If not, refinancing is an option, but it adds another round of interest and extends the total cost.

Comparing Lenders Across Australia

Access to asset finance options from banks and lenders across Australia means you're not limited to one rate or one set of terms. Banks, specialist asset lenders, and non-bank financiers all have different appetites for different industries and equipment types.

A broker can show you what each lender offers and which one suits your business structure, cash flow, and equipment type. That might mean a lower rate, a longer term, or more flexibility with documentation. You're not locked into the first offer you receive.

How quickly can you get funding approved and settled?

Approval times depend on the lender and how complete your application is. With a straightforward application and all documentation ready, some lenders approve within 24 to 48 hours. Settlement usually takes another few days once you've accepted the offer and the supplier has provided an invoice.

If you're buying from a dealer with vendor finance arrangements, the process can be faster. If you're arranging finance independently, expect a week from application to settlement in most cases. Rush jobs are possible when the lender and supplier are responsive, but planning ahead avoids delays when you need the equipment urgently.

Call one of our team or book an appointment at a time that works for you. We'll walk through your equipment needs, compare options from lenders across Australia, and arrange funding that fits your business cash flow and growth plans.

Frequently Asked Questions