Equipment finance allows Australian small businesses to purchase vehicles, machinery and other income-producing assets without paying the full purchase price upfront. The cost is spread across an agreed finance term, helping the business preserve working capital for wages, suppliers, fuel, maintenance and other operating expenses.
The Asset Finance Shop (TAFS) arranges equipment finance for Australian small businesses and sole traders through access to more than 80 bank and non-bank lenders. TAFS uses an internal credit team to assess each application, compare suitable options and prepare the deal before it is formally submitted to a lender.
Equipment finance can be used by established businesses, newer ABN holders and operators who qualify for low doc lending. The available structure, interest rate and documentation requirements will depend on the business, the asset and the lender’s current criteria.
This guide explains how equipment finance works, what can be financed, how repayments are structured and what Australian business owners should expect before applying.
Equipment finance is a type of commercial finance used to purchase assets that support the operation or growth of a business.
The equipment generally provides security for the loan. The business uses the asset to generate income while repaying the finance over an agreed term.
Equipment finance can be used for:
Finance may be available for new and used equipment purchased through a dealer, private seller or auction, subject to lender requirements.
The equipment finance process generally involves an initial business assessment, lender comparison, formal application and settlement with the equipment seller.
The first step is deciding what the business needs to purchase and how the equipment will be used.
Consider:
You can begin discussing equipment finance before selecting the exact asset. The lender will need the final equipment and seller details before settlement.
TAFS reviews the business and proposed purchase before submitting a formal application.
The assessment can include:
TAFS begins with a soft credit check that leaves no mark on the applicant’s credit file.
Each equipment lender has different policies.
One lender may suit an established business purchasing a new truck, while another may be more suitable for a sole trader purchasing a used excavator through a private seller.
Lenders can have different requirements for:
TAFS assesses the application against the criteria of more than 80 lenders before deciding where a formal submission should be made.
Once suitable lender options have been identified, the finance can be structured around the business and asset.
The structure may include:
The term and repayments should suit the business’s cash flow and the expected working life of the equipment.
The application is submitted to the selected lender after the business has reviewed the available option.
The lender may then request additional information, clarify bank statement activity or ask questions about the asset and its intended use.
Submitting a complete application to a suitable lender can reduce delays and avoid unnecessary credit enquiries.
Once the application is approved, the lender prepares the finance documents.
Settlement takes place after the documents have been signed and the lender has completed its final checks. The approved funds are generally paid directly to the dealer, auction house or private seller.
The business can then take ownership and begin using the equipment.
The main finance product TAFS arranges for business equipment purchases is a chattel mortgage.
Under a chattel mortgage:
A chattel mortgage can be used for trucks, machinery, commercial vehicles and other business equipment.
The business may be able to claim the GST on the purchase price, along with eligible interest and depreciation deductions. Speak with your accountant about the tax treatment that applies to your circumstances.
Equipment leasing is a broader term used for arrangements where a business pays to use equipment that is owned by a finance or rental provider.
Under a lease or rental arrangement, ownership generally remains with the provider during the term. The contract may include return, renewal or purchase conditions at the end.
The ownership, repayment and tax treatment can differ from a chattel mortgage.
TAFS primarily arranges chattel mortgage finance, where the business owns the equipment from settlement. Businesses comparing equipment leasing with a chattel mortgage should consider ownership, total cost, end-of-term conditions and how long they plan to keep the asset.
Equipment finance repayments depend on the complete loan structure.
The main factors include:
A larger deposit reduces the amount borrowed, which can lower regular repayments and total interest.
A longer term can also reduce repayments, although the business may pay more interest because the debt remains outstanding for longer.
A balloon payment is a lump sum left until the end of the finance term.
Including a balloon reduces the amount of principal repaid through regular instalments. This can lower monthly repayments and preserve cash flow during the loan term.
The remaining balloon must be managed at the end through:
Before choosing a balloon, consider:
The balloon should reflect the likely future value and remaining working life of the asset.
The available finance term depends on the equipment and lender.
Terms commonly range from two to seven years, although the final term will depend on:
A newer truck or long-life machine may qualify for a longer term than older equipment nearing the end of its commercial life.
The loan should not extend so far that the business is still making repayments after the equipment needs replacing.
The cost of equipment finance includes more than the advertised interest rate.
When comparing options, review:
A lower repayment may result from a longer term or larger balloon. It does not automatically mean the finance is cheaper overall.
The best option should balance the regular repayment, total cost and the amount of working capital the business needs to retain.
Equipment finance can support businesses across a broad range of Australian industries.
Yes. Used business equipment can be financed through selected lenders.
The lender will consider:
Older or specialised equipment may require an inspection or valuation.
The available finance term may also be shorter for used equipment, particularly when the asset will be significantly older by the end of the loan.
Yes. Selected lenders will finance equipment purchased through a private sale.
The lender may need to verify:
Private sales can require more checks than dealer purchases. TAFS coordinates the required information between the buyer, seller and lender.
Yes. Auction purchases can be financed through selected lenders.
Pre-approval may be available before bidding, although final approval will depend on the equipment purchased and whether it meets the lender’s criteria.
Before bidding, include:
Auction houses can have short payment deadlines, so completing the initial finance assessment before bidding can help prevent delays.
Yes. Sole traders can apply for business equipment financing.
The lender may assess:
Complete financial statements are not always required.
Low doc equipment finance may be available through selected lenders using recent bank statements and other supporting business information.
A newer ABN does not automatically prevent a business from obtaining equipment finance.
Selected lenders may consider:
The business will need to show how the equipment will support income and how the repayments will be met.
Additional documentation may be required when there is limited trading history.
Low doc equipment finance is assessed without always requiring complete financial statements or several years of tax returns.
The lender may instead use:
Low doc does not mean no assessment. The lender must still be satisfied that the business can afford the repayments.
Full doc applications may provide access to additional lenders or more competitive pricing where the financial information is strong and current.
For an initial assessment, you may need:
Later in the process, the lender may request:
The exact requirements will depend on the business, equipment and amount financed.
Lenders assess the business, the applicant and the asset.
A longer trading history can give the lender more information about income, expenses and account conduct.
Newer businesses may still qualify where the applicant has relevant experience and a reliable source of work.
The lender needs to see that the business can manage the proposed repayment alongside existing commitments and normal operating costs.
A clean credit file can support the application.
Previous credit issues do not always prevent approval, but they may affect the lender options, rate, deposit and term.
The lender may review:
The lender will consider the asset’s type, age, value, condition and resale market.
Equipment with a clear business purpose and established resale demand can provide stronger security.
A deposit is not required for every application, but it can reduce the amount financed and strengthen the proposal.
A trade-in may also be used as the business’s contribution.
Straightforward equipment finance applications can be approved in as little as 24 hours once the required information has been supplied.
Approval can take longer when the application involves:
Settlement timing will also depend on the seller, asset documentation and completion of the lender’s finance documents.
Equipment finance and small business loans can both provide capital, but they serve different purposes.
Equipment finance is used to purchase a specific business asset. The asset generally provides security for the loan.
A small business loan can be used for broader purposes, including:
Equipment finance may provide a more suitable structure when the business is buying a specific vehicle or machine.
A broader business loan may be more appropriate where the funds will cover several expenses and are not tied to one asset.
Paying cash for a major asset can reduce the funds available for normal business operations.
Equipment finance allows the purchase cost to be spread over time while the business retains capital for:
The equipment can begin supporting the business while the purchase is being repaid.
The repayment should still remain affordable during quieter periods and when the asset requires maintenance.
TAFS reviews the asset, business history, finance amount and intended use of the equipment.
The initial credit check leaves no mark on the applicant’s credit file.
The TAFS credit team assesses the application against the criteria of more than 80 lenders.
Available lender and finance structures are reviewed based on the business and equipment.
The application is submitted to the selected lender.
TAFS coordinates the lender requirements, finance documents and payment to the equipment seller.
Before proceeding, ask:
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.
The best option depends on the asset, business history, credit profile, cash flow and available documentation.
Compare the interest rate, repayment, term, balloon, total cost and lender requirements.
TAFS can compare suitable options through access to more than 80 lenders.
No. Equipment finance is usually tied to a specific asset that provides security for the loan.
A small business loan can be used for broader expenses such as working capital, stock and supplier payments.
Yes. Sole traders can apply for equipment finance.
Low doc options may be available using recent bank statements, ABN details and supporting business information.
Yes. Selected lenders will consider newer businesses.
Previous experience, available work, bank statements, credit history and the equipment itself can help support the application.
A deposit is not required for every application.
The lender may request one depending on the business, asset, finance amount and overall application.
Yes. Used equipment can be financed through selected lenders when purchased through a dealer, private seller or auction.
The lender will assess the asset’s age, condition, value and expected working life.
Yes. A balloon can be included in some chattel mortgage structures.
It reduces regular repayments but leaves a larger final amount payable at the end of the term.
TAFS can arrange approvals in as little as 24 hours for straightforward applications with the required information available.
Settlement timing will depend on lender checks, asset details and completion of the finance documents.
TAFS can assess your equipment purchase, complete a soft credit check and compare finance options through access to more than 80 lenders.
Contact The Asset Finance Shop or apply online at www.tafs.com.au.
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 personal circumstances into account. Speak to a TAFS broker for options tailored to your business, and to your accountant regarding tax treatment.