Equipment financing for small businesses can help Australian operators purchase essential vehicles, machinery and commercial equipment without using a large amount of working capital upfront.

For many businesses, the question is not simply:

Can we afford to buy the equipment?

A better question is:

What happens to our cash position after we buy it?

A business may have enough cash in the bank to purchase a $100,000 machine outright.

But using that $100,000 can reduce the money available for:

• Wages
• Suppliers
• Fuel
• Stock
• Tax obligations
• Insurance
• Repairs
• Marketing
• New contracts
• Unexpected expenses

Equipment finance allows the business to spread the purchase cost over an agreed period while putting the asset to work immediately.

The Asset Finance Shop (TAFS) arranges equipment finance for Australian small businesses through access to more than 80 bank and non-bank lenders.

TAFS can review the business, asset, available documentation and cash flow requirements before comparing suitable small business equipment loans.

For straightforward applications where the required information is available, approval can be arranged in as little as 24 hours.

This guide explains how equipment financing can protect working capital, how repayments can be structured and what small businesses should compare before financing essential assets.

What Is Equipment Financing for Small Businesses?

Equipment financing is commercial finance used to purchase an asset that supports or generates income for a business.

Rather than paying the complete purchase price upfront, the business finances the asset and makes agreed repayments over time.

Eligible assets can potentially include:

• Trucks
• Vans
• Utes
• Excavators
• Skid steers
• Loaders
• Tractors
• Harvesters
• Forklifts
• Manufacturing machinery
• Cleaning equipment
• Trade equipment
• Commercial kitchen equipment
• Access equipment
• Trailers
• Other commercial machinery

TAFS primarily arranges equipment purchases through a chattel mortgage.

Under a chattel mortgage:

• The business purchases the equipment
• The business owns it from settlement
• The lender registers security over the asset
• Finance is repaid over an agreed term
• A deposit may be included
• A trade-in may contribute
• A balloon payment may potentially be used
• The lender removes its security once the finance has been repaid

Why Protecting Working Capital Matters

Working capital is the money a business has available to meet its short-term operating requirements.

A business can be profitable and still experience cash flow pressure.

For example, a contractor might have plenty of work booked but still need to pay:

• Employees this week
• Fuel tomorrow
• Suppliers in 14 days
• Insurance this month

while customers may not pay invoices for another 30 days.

That timing difference matters.

Using a large amount of available cash to purchase equipment can leave less room to absorb normal business expenses while waiting for revenue to come in.

Equipment finance can separate the asset purchase from day-to-day operating cash.

Example: Buying Equipment With Cash

Consider a small business with:

Cash reserves: $180,000
Equipment required: $120,000

If the business pays cash:

Cash remaining: $60,000

The company owns the machine outright.

But $120,000 of liquid cash has disappeared from the business immediately.

The remaining $60,000 may need to cover:

• Payroll
• BAS
• Suppliers
• Fuel
• Insurance
• Maintenance
• Unexpected costs

The business may technically be asset-rich while becoming much tighter on cash.

Example: Financing the Same Equipment

Now consider the same purchase using equipment finance.

Equipment price: $120,000
Deposit: $20,000
Amount financed: $100,000

Instead of using $120,000 upfront, the business uses $20,000 and retains significantly more cash.

That retained capital can remain available for:

• Operating expenses
• Another job
• Additional staff
• Stock
• Repairs
• Seasonal fluctuations

The business pays interest for using the finance, so the decision is not automatically cheaper.

The commercial question is whether retaining the cash is worth the cost of borrowing.

Paying Cash vs Equipment Finance

Neither option is automatically correct.

The business should consider what else its cash needs to do.

When Paying Cash Can Make Sense

Paying cash may suit a business that:

• Has significant surplus cash
• Has strong working capital after the purchase
• Wants to avoid finance costs
• Does not need the money for other opportunities
• Wants no ongoing repayment

The mistake is assuming cash is automatically the best option simply because the money is available.

Businesses should look at the position after the purchase.

When Equipment Finance Can Make More Sense

Financing may suit a business that wants to:

• Preserve working capital
• Spread the purchase cost
• Match repayments with income generated by the asset
• Take on a new contract
• Add capacity
• Replace failing equipment
• Avoid draining cash reserves
• Keep money available for operating expenses

The strongest reason to finance an asset is generally that it supports the wider business.

Equipment Finance for a New Contract

New contracts often create a cash flow gap.

A business might win a contract worth hundreds of thousands of dollars but need to invest before the first invoice is paid.

The business may require:

• Machinery
• Vehicles
• Employees
• Fuel
• Materials
• Insurance
• Site costs

Consider a civil contractor that wins additional work but needs a:

$160,000 excavator

before the project begins.

Paying the full $160,000 from cash may leave less money available for:

• Wages
• Diesel
• Float transport
• Materials
• Project mobilisation

Financing the excavator can potentially allow the equipment and working capital requirements to be separated.

Equipment Finance for Business Growth

Growing businesses often encounter the same problem:

Work is increasing faster than available equipment.

This can happen when:

• A tradie hires another employee
• A transport business adds another route
• A cleaner wins another commercial site
• A manufacturer receives larger orders
• An earthmoving contractor wins another project

The business needs assets before it can fully generate the additional revenue.

Small business equipment loans can allow those assets to be purchased without waiting to accumulate the complete purchase price in cash.

Replacing Ageing Equipment

Equipment finance is not only for expansion.

Replacing an unreliable asset can also protect cash flow.

An old machine may have no finance repayment.

But it may create costs through:

• Repairs
• Downtime
• Lost productivity
• Replacement hire
• Missed work
• Higher maintenance
• Higher fuel consumption

The correct comparison is not simply:

Paid-off equipment versus financed equipment.

Compare:

Total cost of keeping the old asset

against:

Total cost and productivity of the replacement.

Example: Replacing an Old Machine

Consider a machine requiring:

Repairs: $3,000 per month on average
Lost productivity: $2,000 per month
Total estimated impact: $5,000 per month

If replacement equipment creates a manageable finance repayment while reducing those costs, replacing the machine may improve the business despite introducing debt.

The decision should be based on the complete commercial effect.

What Is a Chattel Mortgage?

A chattel mortgage is the primary equipment finance structure arranged by TAFS.

The business owns the asset from settlement.

The lender provides the funds and registers security over the equipment until the finance has been repaid. Pasted markdown(20260820-020148)

A chattel mortgage may be structured with:

• Deposit
• Trade-in
• Agreed finance term
• Regular repayments
• Balloon payment

This allows the finance to be adjusted around the equipment and business cash flow.

Can Equipment Finance Be Structured Around Cash Flow?

Potentially.

The regular repayment can be affected by:

• Amount financed
• Deposit
• Finance term
• Interest rate
• Balloon
• Asset
• Lender

The aim should not simply be to produce the lowest possible repayment.

A sustainable structure should consider:

• Monthly revenue
• Existing commitments
• Seasonal variation
• Customer payment terms
• Expected asset income
• Working capital requirements

Using a Deposit

A deposit reduces the amount financed.

For example:

Equipment: $150,000
Deposit: $30,000
Finance amount: $120,000

A larger deposit can reduce:

• Finance amount
• Regular repayment
• Total interest

But it also removes cash from the business.

Should You Use the Largest Deposit Possible?

Not automatically.

Consider what happens after settlement.

If a business has:

$70,000 cash available

and puts:

$60,000 into the equipment

it may only have $10,000 left for operating expenses.

A smaller deposit may produce a higher repayment but leave the business better protected from:

• Slow-paying customers
• Repairs
• Seasonal downturns
• Supplier costs
• Tax obligations

The deposit should be considered alongside working capital.

Can Equipment Finance Be No Deposit?

Potentially.

Not every equipment finance application requires a deposit.

Some eligible businesses may qualify for finance covering the full purchase price.

Others may need a contribution.

The lender may consider:

• ABN age
• Trading history
• Credit profile
• Equipment value
• Purchase price
• Finance amount
• Documentation
• Existing debt

Deposit requirements vary between lenders.

Using Trade-In Equity

A business replacing existing equipment may have equity available.

For example:

Current machine value: $70,000
Existing finance payout: $25,000

Potential equity:

$45,000

That equity can potentially contribute toward the replacement equipment.

This may allow the business to reduce new borrowing without using the same amount of cash.

How Does a Balloon Payment Work?

A balloon leaves an agreed amount outstanding at the end of the finance term.

For example:

Amount financed: $120,000
Term: 5 years
Balloon: $24,000

Regular repayments are generally lower because $24,000 remains payable at the end.

A balloon can improve monthly cash flow.

The trade-off is that the business still needs to deal with the final amount.

When Can a Balloon Help?

A balloon may suit a business that wants to keep monthly repayments lower while an asset is generating income.

For example, a transport business may prefer to retain more monthly cash for:

• Fuel
• Tyres
• Insurance
• Repairs

An earthmoving contractor may need more cash available for:

• Diesel
• Wages
• Float transport
• Project costs

The balloon should still make sense relative to:

• Asset age
• Expected future value
• Finance term
• Replacement plan

Does a Balloon Make Equipment Finance Cheaper?

Not necessarily.

It generally lowers regular repayments.

But because more principal remains outstanding for longer, the business may pay more interest overall.

Compare:

• Monthly repayment
• Balloon
• Finance term
• Total estimated finance cost

not just the smallest monthly number.

Equipment Finance Terms

The available term depends on factors including:

• Asset type
• Asset age
• Expected working life
• Finance amount
• Business
• Lender

A longer term generally produces lower regular repayments.

But it can also mean:

• More time paying interest
• Debt remains outstanding for longer

The finance term should match how long the business expects the asset to remain productive.

Example: Three-Year vs Five-Year Finance

Consider the same piece of machinery.

Three-Year Term

Generally:

• Higher repayment
• Faster debt reduction
• Shorter finance period

Five-Year Term

Generally:

• Lower repayment
• Slower debt reduction
• Longer finance period

Neither is automatically better.

Cash flow and expected asset life should guide the decision.

Equipment Finance vs Equipment Leasing

Equipment leasing is another structure businesses may encounter.

The ownership position differs from a chattel mortgage.

Under a chattel mortgage:

• The business owns the equipment from settlement
• The lender holds security over it

Under a typical lease:

• The finance provider generally owns the equipment
• The business pays to use it

Businesses comparing equipment leasing with a chattel mortgage should review:

• Ownership
• Regular payment
• Contract length
• End-of-term position
• Total cost
• Tax treatment
• Replacement requirements

TAFS primarily arranges chattel mortgage equipment finance.

Equipment Finance vs Business Loan

Equipment finance and a general business loan are also different.

Equipment Finance

Usually tied to a specific identifiable asset.

That asset provides security for the finance.

Business Loan

May provide funds for broader purposes such as:

• Wages
• Marketing
• Stock
• Supplier expenses
• General working capital

If the primary need is a machine or vehicle, equipment finance may provide a more appropriate structure.

If the business needs flexible capital across several expenses, a business loan may be more suitable.

What Equipment Can Small Businesses Finance?

Equipment finance can potentially be used across a wide range of industries.

Construction and Earthmoving

• Excavators
• Skid steers
• Posi-tracks
• Loaders
• Rollers
• Graders
• Dozers
• Attachments

Transport

• Trucks
• Prime movers
• Rigid trucks
• Tippers
• Trailers
• Vans
• Utes

Trades

• Work vehicles
• Trailers
• Larger tool packages
• Access equipment
• Generators
• Testing equipment

Agriculture

• Tractors
• Harvesters
• Headers
• Seeders
• Balers

Manufacturing

• CNC machinery
• Lathes
• Presses
• Fabrication machinery
• Packaging equipment

Commercial Cleaning

• Floor scrubbers
• Sweepers
• Commercial cleaning machines
• Service vehicles

Other commercial equipment may also qualify.

Can Used Equipment Be Financed?

Yes.

Selected lenders can finance used equipment purchased through:

• Dealer
• Private seller
• Auction

The lender may assess:

• Age
• Condition
• Operating hours
• Purchase price
• Market value
• Expected working life

Used equipment can be a practical way to preserve cash while still increasing business capacity. Pasted text(28)

Can Private-Sale Equipment Be Financed?

Potentially.

Selected lenders can finance eligible private-sale business assets.

Additional checks may include:

• Seller identity
• Proof of ownership
• Serial number
• VIN
• Existing security
• Asset condition
• Market value

A valuation or inspection may also be required.

Can Auction Equipment Be Financed?

Potentially.

Selected lenders can consider eligible auction purchases.

It can help to complete an initial finance assessment before bidding so the business has a clearer idea of:

• Approximate borrowing position
• Deposit requirement
• Suitable asset age
• Finance term
• Other conditions

Final approval will still depend on the asset purchased.

Can Sole Traders Get Equipment Finance?

Yes.

Sole traders can apply for equipment finance.

The lender may consider:

• ABN age
• Time trading
• Industry experience
• Bank statements
• Credit history
• Current work
• Existing debt
• Equipment

Low doc options may also be available through selected lenders.

Can New Businesses Get Equipment Finance?

Potentially.

Selected lenders can consider newer businesses.

Where trading history is limited, the lender may place greater emphasis on:

• Previous industry experience
• Current contracts
• Upcoming work
• Bank statements
• Credit profile
• Available deposit
• Equipment being purchased

A newer ABN does not necessarily mean the person behind the business has no industry experience.

Can Equipment Finance Be Low Doc?

Potentially.

Selected lenders can assess eligible applications using information such as:

• Recent bank statements
• ABN details
• Credit history
• Industry experience
• Existing finance
• Asset details

instead of requiring complete financial statements in every application.

Low doc still involves lender assessment.

What Do Equipment Finance Lenders Assess?

Business History

Lenders may look at:

• ABN age
• Time trading
• Business structure

Industry Experience

Particularly important for newer businesses.

Business Income

This may be assessed through:

• Bank statements
• BAS
• Financial statements
• Tax returns
• Contracts

depending on the lender.

Existing Debt

This can include:

• Vehicle finance
• Equipment finance
• Credit cards
• Business loans
• Other obligations

Credit History

The lender may review current and previous repayment conduct.

Equipment

The lender considers:

• Asset type
• Age
• Value
• Condition
• Expected working life

Repayment Capacity

Ultimately, the business needs to demonstrate that the proposed repayment fits alongside its other commitments.

Why Lender Comparison Matters

Equipment finance providers do not all use the same credit policy.

For example:

Lender A

May prefer established businesses with full financial statements.

Lender B

May accept low doc applications.

Lender C

May consider newer ABNs.

Lender D

May be more comfortable with older machinery.

Lender E

May accept private-sale equipment.

The business has not changed.

The lender criteria have.

That is why lender comparison can matter.

Interest Rate vs Cash Flow

The lowest interest rate does not automatically mean the strongest equipment finance option.

Consider:

Option A

Lower rate
Large deposit
Shorter term
High monthly repayment

Option B

Slightly higher rate
Smaller deposit
Longer term
Lower monthly repayment

Option A may cost less overall.

Option B may protect more working capital.

The correct choice depends on what the business needs.

What Should You Compare Between Equipment Finance Options?

Compare:

• Equipment purchase price
• Deposit
• Trade-in
• Amount financed
• Interest rate
• Finance term
• Monthly repayment
• Balloon
• Fees
• Early payout conditions
• Total estimated finance cost
• Documentation requirements
• Working capital remaining after settlement

A finance option should be judged by its effect on the whole business.

Example: Contractor Protecting Cash Flow

Consider a contractor with:

Cash: $150,000
Excavator: $130,000

The business could pay cash.

But it also has:

• $30,000 payroll due
• $20,000 BAS obligation
• $25,000 supplier payments
• New project mobilisation costs

Paying $130,000 cash for the excavator could leave the business exposed.

Financing some or all of the excavator may allow the contractor to preserve enough working capital to comfortably meet those obligations.

Example: Cleaning Business Winning a New Contract

A commercial cleaning business wins a large contract.

Before commencement it needs:

• Ride-on scrubbers
• Sweepers
• Additional employees
• Cleaning chemicals
• Insurance
• Vehicles

The customer may not pay the first invoice for 30 days.

Using the company's cash to purchase all the equipment upfront could make funding wages and mobilisation more difficult.

Equipment finance can allow the machines to be acquired while retaining more cash for contract delivery.

Example: Tradie Adding Another Employee

A trade business hires another technician.

To make that employee productive, the business needs:

• Work van
• Service body
• Tools
• Testing equipment

The employee may begin generating revenue immediately.

But buying all those assets with cash creates a large upfront expense.

Equipment finance can spread the asset cost while the new employee begins producing income.

Cash Flow Problems Equipment Finance Cannot Fix

Finance should not be used simply to hide an underlying cash flow problem.

Warning signs may include:

• Continuing operating losses
• Existing repayments already unaffordable
• No clear use for the equipment
• No income source to support the new debt
• Financing equipment that is not required

The asset should support the business.

Finance cannot turn an uneconomic purchase into a good one.

Questions to Ask Before Financing Equipment

Before applying, ask:

1. What does the equipment cost?
2. How much cash do we currently have?
3. How much working capital should remain?
4. What income will the asset generate?
5. What costs will it reduce?
6. How long will we use it?
7. Should we pay a deposit?
8. Can trade-in equity be used?
9. What repayment can the business comfortably support?
10. Should a balloon be included?
11. What term matches the equipment life?
12. What rate applies?
13. What fees apply?
14. What is the total finance cost?
15. Can we repay early?
16. What happens if we sell the equipment?

How the TAFS Equipment Finance Process Works

Step 1: Understand the Equipment Requirement

TAFS reviews:

• Asset
• Purchase price
• New or used
• Dealer, private seller or auction
• How the equipment will support the business

Step 2: Review the Business

TAFS considers:

• ABN history
• Industry experience
• Current income
• Credit profile
• Existing finance
• Available documentation
• Deposit or trade-in

Step 3: Soft Credit Check

TAFS begins with a soft credit check that leaves no formal enquiry on the credit file.

Step 4: Internal Credit Assessment

The internal credit team assesses the application against suitable lender policies.

Step 5: Compare Lender Options

TAFS can compare suitable options through access to more than 80 bank and non-bank lenders. Pasted text(27)

Step 6: Structure Repayments

The finance can be considered around:

• Deposit
• Trade-in
• Amount financed
• Term
• Balloon
• Regular repayment

The aim is to create a structure that fits the business rather than simply maximising the loan amount.

Step 7: Formal Application

Once a suitable lender has been selected, one formal application is submitted.

Step 8: Approval and Settlement

TAFS coordinates the remaining lender, seller and equipment requirements through to settlement.

Straightforward applications can be approved in as little as 24 hours once the required information is available. Pasted text(27)

Equipment Finance Application Checklist

Not every lender requires every item.

Frequently Asked Questions

How Does Equipment Finance Work for Small Businesses?

Equipment finance allows a business to purchase an asset and repay the cost over an agreed term.

Under a chattel mortgage, the business owns the equipment from settlement while the lender holds security over it until the finance is repaid.

How Does Equipment Finance Protect Cash Flow?

It can reduce the amount of cash required upfront.

Instead of paying the complete equipment price immediately, the business can retain more working capital while making structured repayments.

Is Equipment Finance Better Than Paying Cash?

Not automatically.

Paying cash avoids finance costs.

Financing preserves more working capital.

The right choice depends on what else the business needs its cash for.

What Is Working Capital?

Working capital is the money available to meet normal short-term business costs such as wages, suppliers, fuel, insurance and tax obligations.

Can Equipment Finance Cover the Full Purchase Price?

Potentially.

Selected applications may qualify for finance covering the full eligible purchase price.

Others may require a deposit.

Do I Need a Deposit?

Not always.

Deposit requirements depend on the business, equipment, finance amount and lender.

Can I Use a Trade-In?

Potentially.

Available equity in an existing asset may contribute toward the replacement purchase.

Can Equipment Finance Have a Balloon?

Yes.

A balloon can be included in some chattel mortgage structures.

It can reduce regular repayments but leaves a larger amount payable at the end.

Does a Longer Finance Term Improve Cash Flow?

It can reduce regular repayments.

However, the business may pay interest for longer.

The term should match the expected working life of the equipment.

What Is a Small Business Equipment Loan?

A small business equipment loan is finance used to purchase commercial machinery, vehicles or other income-producing assets.

The asset generally provides security for the finance.

What Equipment Can Be Financed?

Eligible assets can include trucks, vans, excavators, construction machinery, agricultural equipment, forklifts, manufacturing machinery and other commercial equipment.

Can Sole Traders Get Equipment Finance?

Yes.

Sole traders can apply for equipment finance subject to lender criteria.

Can New Businesses Get Equipment Finance?

Potentially.

Selected lenders will consider newer businesses based on industry experience, current work, financial position and the proposed asset.

Can I Get Low Doc Equipment Finance?

Potentially.

Selected lenders can use bank statements and other business information rather than requiring full financial statements for every application.

Can Used Equipment Be Financed?

Yes.

Selected lenders can finance used equipment purchased through dealers, private sellers and auctions.

Can Private-Sale Equipment Be Financed?

Potentially.

Additional seller, ownership and equipment checks may be required.

Can Auction Equipment Be Financed?

Potentially.

Completing an initial finance assessment before bidding can help establish likely lender requirements.

Is Equipment Finance the Same as Equipment Leasing?

No.

Under a chattel mortgage, the business owns the asset from settlement.

Under a typical lease, the provider generally owns the equipment while the business pays to use it.

Is Equipment Finance the Same as a Business Loan?

No.

Equipment finance is normally tied to a specific asset.

A business loan may provide funds for broader business expenses.

How Do I Compare Equipment Finance Options?

Compare:

• Interest rate
• Deposit
• Amount financed
• Term
• Repayment
• Balloon
• Fees
• Total estimated finance cost
• Documentation
• Cash remaining after settlement

What Equipment Finance Structure Does TAFS Mainly Arrange?

TAFS primarily arranges chattel mortgage finance.

The business owns the asset from settlement while the lender holds security over it until the finance has been repaid. Pasted markdown(20260820-020148)

How Many Lenders Can TAFS Compare?

TAFS has access to more than 80 bank and non-bank lenders. Pasted text(27)

How Quickly Can TAFS Arrange Equipment Finance?

Straightforward applications can be approved in as little as 24 hours once the required information is available. Pasted text(27)

Protect Working Capital With Equipment Finance

Buying essential equipment should improve the business, not leave it short of the cash required to operate.

A business may have enough money to purchase an asset outright and still decide that keeping more working capital available is commercially stronger.

The key is finding the right balance between:

• Cash upfront
• Amount financed
• Regular repayment
• Finance term
• Balloon
• Total finance cost
• Working capital remaining

TAFS can review your equipment purchase, current cash position, available deposit or trade-in and repayment requirements before comparing suitable equipment finance options through access to more than 80 bank and non-bank lenders.

For straightforward applications where the required information is available, approval can be arranged in as little as 24 hours.

The Asset Finance Shop (TAFS) is a commercial asset finance brokerage based in Sydney.

Information on this page is general in nature and doesn't take your circumstances into account. Speak to a TAFS broker about finance options for your business and to your accountant regarding tax treatment.