What equipment financing options are available?

Choosing the right business equipment financing for you can be tricky.

Depending on your business situation and goals, you can choose from:

  • Finance lease: The lender purchases the equipment and leases it to you for an agreed term.
  • Commercial hire purchase: This is also called asset purchase and is similar to a finance lease except your business immediately owns the equipment once the final payment is made.
  • Novated lease: A novated lease gives your employees an option to lease a vehicle of their choice and retain ultimate responsibility for it while you make the lease payments by making deductions on their pre-tax income.
  • Chattel mortgage: The equipment is owned by the business but will be used as the primary security against the mortgage.

The Goods and Services Tax (GST) and tax benefits available to you should factor in your decision-making.

It’s recommended that you speak with your accountant or an independent tax advisor before you make any decisions.

We have mortgage brokers that specialise in equipment financing loans.

Call us on 1300 889 743 or fill in our free online assessment form to discover if you qualify.

What can I purchase with equipment finance?

  • Cars, trucks, buses and utilities.
  • Forklifts, cranes and similar equipment.
  • Computers and office equipment.
  • Printing, medical and manufacturing equipment.
  • Industrial plant equipment including those for the mining and forestry sectors.
  • Civil equipment such as concrete pumping and quarry equipment.
  • Earthmoving equipment such as trenchers and excavators.

Other equipment such as gaming equipment and arboricultural equipment can also be financed.

A single lender may not offer finance for all of the above equipment so you need to apply with the right lender.

How do I qualify for business equipment finance?

Like all business and commercial loans, getting approved for equipment finance will depend on the strength of your case.

Lenders will consider:

  • Your business experience.
  • The type of business that you run, particularly if it is in a high-risk sector like construction or mining.
  • Your business profit and cash flow position.
  • The type of equipment that you want to finance, particularly specialised machinery as opposed to a standard vehicle.
  • Your Interest Coverage Ratio (ICR), which based on your income to debt ratio.

Generally speaking, lenders rank businesses from 1 to 15 and applications usually from A to D.

Extremely strong businesses can get a 1A rank. A new business may get a 15D rank and get declined.

If you have only been operating your business for 2-3 years, getting approved for business equipment financing is very challenging so it’s best to speak with a mortgage broker that specialises in commercial lending.

How do I prove my business income?

Some of the common ways to prove your business income include:

  • Projected cash flow statements.
  • Bank statements and tax returns.
  • Your Year To Date (YTD) income from MYOB, in some cases.
  • Your Net Cash After Operations, in some cases.

Where can I find equipment finance interest rates?

Most lenders don’t publish the interest rates on their equipment finance options. This is mainly because it depends on a number of factors.

The option you choose, the type and age of the equipment as well as the term of the agreement affect the interest rate.

However, you can check out the rates on other business loan options on our business loan interest rates page.

Why should I use a mortgage broker?

Mortgage brokers aren’t tied with a particular lender. This way they can help you compare and choose a range of lenders and products.

The market is always changing and new products are always coming up. A specialist mortgage broker can help you choose an option that suits your business.

If you want to learn more about why to use mortgage broker, you can check out the why to use a mortgage broker infographic.

You can call us on 1300 889 743 or complete our free online application form and speak with one of our specialist mortgage brokers.

  • Jacob G

    I applied for equipment finance with a lender and received a loan agreement that I don’t really like. Can we negotiate the terms on the loan agreement or is it finalised?

  • Hi Jacob,

    You can actually negotiate on the business loan agreement because the business loan term sheet is essentially the bank’s initial offer to get our business. So you do have the power to negotiate the terms of their loan offer. For more information on how a business loan term sheet works and how to get a great deal, you can check out the business loan agreement page:
    https://www.homeloanexperts.com.au/business-loans/business-loan-agreement/

  • Jim N

    I’ve been running a business for 4 years now. I don’t own real estate and I could be getting a home loan later on too but now I need finance to buy a bus.

  • Hi Jim, we can help you with this and settlement shouldn’t take long; a couple of days should do. We have mortgage brokers who specialise in plant and equipment finance so you should have no problem going either full doc or low doc although note that low doc may sometimes require you to own property. Please call us on 1300 889 743 to discuss or enquire online:
    https://www.homeloanexperts.com.au/free-quote/

  • Logan

    Hi, I’ve been working as a truck driver for more than two years. I’ve been considering going self-employed for a while now and my employer supports this and told me that he’s ready to offer me a contract when I do. First thing I need to do is buy my own truck and for that I need to borrow around $100,000. I do not own property and as on right now, I’m still PAYG. Can this be done?

  • Hey Logan, yes, this can be done. We have a few lenders in mind that can provide you this loan. A PAYG with two years employment history is a good situation and unless you have a significant bad credit history or any other major credit issue, it shouldn’t be too hard to secure the finance. Please call 1300 889 743 to speak with one of our plant and equipment finance specialists to find out which lender is most suitable for your situation and loan needs.