Equipment finance helps Australian small businesses purchase vehicles, machinery and other income-producing assets without paying the full cost upfront. Instead, the purchase is funded over an agreed term, allowing the business to keep more cash available for wages, suppliers, tax obligations and day-to-day operating expenses.

The Asset Finance Shop (TAFS) is a specialised asset finance broker with access to more than 80 bank and non-bank lenders, a 93% approval rate, low doc options and approvals available in as little as 24 hours for eligible applications.

Whether you are replacing an ageing machine, purchasing equipment for a new contract or adding capacity as your business grows, the right finance structure can help you move forward without placing unnecessary pressure on your working capital.

This guide explains how equipment finance works for Australian small businesses, what assets can be financed, what lenders assess and how to prepare your application.

What Is Equipment Finance?

Equipment finance is a type of commercial finance used to purchase assets that support or generate income for a business.

The equipment itself usually provides security for the loan. The business then repays the finance over an agreed period while using the asset to complete work and generate revenue.

Small business equipment finance can be used for assets such as:

• Excavators and earthmoving machinery
• Trucks, trailers, vans and utes
• Trade tools and specialised equipment
• Manufacturing and engineering machinery
• Agricultural equipment
• Commercial kitchen and hospitality equipment
• Medical and professional equipment
• Technology and business hardware

Equipment can be purchased through a dealer, private seller or auction, subject to the lender's requirements regarding the asset's age, condition and value.

How Does Equipment Finance Work for a Small Business?

The equipment finance process generally involves five steps.

1. Identify What Your Business Needs

Start by deciding what equipment you need and how it will support the business.

Consider:

• The purchase price
• Whether the equipment will be new or used
• How much additional income or efficiency it could create
• How long you expect to use it
• Whether you have a deposit or trade-in available

You can begin discussing your finance options before selecting the exact asset. However, the lender will need the equipment and seller details before settlement.

2. Complete an Initial Finance Assessment

TAFS begins with a soft credit check that leaves no mark on your credit file.

The internal credit team then reviews your:

• ABN and trading history
• Industry experience
• Credit profile
• Recent business activity
• Current financial commitments
• Proposed equipment purchase
• Available deposit or trade-in

This allows the application to be compared against the policies of more than 80 lenders before a formal submission is made.

3. Compare Suitable Business Financing Options

Each lender has different criteria for equipment types, ABN age, financial documents, loan amounts and credit history.

A business with two years of financial statements may qualify with one group of lenders. A newer business using a low doc application may be better suited to another.

TAFS identifies suitable options based on the strength of the application and the lender's current requirements.

4. Submit One Formal Application

Once you have reviewed the available options, the application is submitted to the selected lender.

This helps avoid unnecessary applications and multiple hard credit enquiries.

5. Approval and Settlement

After approval, the lender completes its final checks and prepares the finance documents.

Once those documents are signed and the seller requirements have been satisfied, the lender pays the approved funds directly to the dealer or private seller.

What Is a Chattel Mortgage?

The main finance product TAFS arranges for equipment purchases is a chattel mortgage.

Under a chattel mortgage, your business owns the equipment from the time the finance settles. The lender registers a security interest over the asset until the loan has been repaid.

The finance can usually be structured with:

• A fixed loan term
• Regular monthly repayments
• A deposit or trade-in contribution
• An optional balloon payment at the end of the term

A balloon payment can reduce regular repayments, although it leaves a larger final amount to be paid or refinanced at the end of the loan.

Your business may also 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.

Some businesses search for equipment leasing when they want to spread the cost of an asset. TAFS mainly arranges chattel mortgage finance, which allows the business to own the equipment from settlement.

Why Do Small Businesses Use Equipment Finance?

Equipment finance allows a business to spread the cost of an asset across the period in which it will be used.

Preserve Business Capital

Paying cash for equipment can reduce the funds available for operating expenses.

Finance allows the business to keep more business capital available for:

• Payroll
• Supplier invoices
• Insurance
• Fuel and maintenance
• Tax and superannuation obligations
• Marketing
• Unexpected expenses

Match Repayments With the Asset's Income

An income-producing asset can help generate the revenue used to make the repayments.

For example, a civil contractor may finance an excavator to complete work that was previously subcontracted. A tradesperson may finance a new van and equipment package to take on additional jobs.

Replace Unreliable Equipment

Older equipment can create costs through repairs, downtime, lost work and reduced productivity.

Financing a replacement can allow the business to upgrade sooner rather than waiting until enough cash has been saved.

Take On New Work

A new contract may require additional machinery, vehicles or tools.

Equipment finance can help the business purchase what it needs to begin the work without using all of its available cash.

Create Predictable Repayments

A structured repayment schedule can make it easier to budget for the equipment as part of the business's regular operating costs.

What Equipment Can a Small Business Finance?

TAFS can arrange equipment finance across a broad range of Australian industries.

Earthmoving and Civil Construction

• Excavators
• Skid steers and posi-tracks
• Loaders
• Rollers
• Graders
• Dozers
• Tippers
• Machinery attachments

Transport and Logistics

• Prime movers
• Rigid trucks
• Trailers
• Refrigerated vehicles
• Courier vans
• Utes
• Service vehicles

Trades and Contracting

• Work vehicles
• Generators
• Scissor lifts
• Compressors
• Test equipment
• Trailers
• Larger tool packages
• Service bodies

Agriculture

• Tractors
• Harvesters
• Headers
• Seeders
• Sprayers
• Agricultural implements

Manufacturing and Engineering

• CNC machines
• Lathes
• Presses
• Fabrication equipment
• Packaging machinery
• Production lines

Hospitality and Retail

• Commercial ovens
• Refrigeration
• Coffee machines
• Food preparation equipment
• Point-of-sale systems
• Business fit-outs

Professional and Business Equipment

• Medical and dental equipment
• Allied health equipment
• Office technology
• Solar systems
• Computer hardware
• Other business-critical assets

Can a Sole Trader Get Equipment Finance?

Yes. Equipment finance is available to sole traders, subject to the lender's criteria and the strength of the application.

Lenders can consider factors such as:

• Previous industry experience
• Time registered under the ABN
• Recent bank statement activity
• Existing contracts or regular work
• Personal credit history
• Current assets and liabilities
• The type and value of the equipment
• Any deposit or trade-in available

A sole trader does not always need complete financial statements. Low doc equipment finance may be available using recent bank statements and other supporting information.

Can a New Business Get Equipment Finance?

A newer business can still qualify for equipment finance.

Several lenders on the TAFS panel will consider businesses with ABNs registered for less than 12 months. Approval is based on the complete application, not only the age of the ABN.

A new business may be asked to provide:

• Evidence of previous industry experience
• Details of current or upcoming work
• Contracts, purchase orders or letters of intent
• Personal or business bank statements
• A summary of assets and liabilities
• A deposit or trade-in, where required

A work source agreement may also be required in some start-up applications. Your broker will confirm what the matched lender needs.

What Documents Are Needed for Equipment Finance?

The exact requirements depend on the lender, the business and the amount being financed.

For an initial assessment, you may need:

• Driver's licence
• ABN and business details
• Recent business bank statements
• Details of your industry experience
• Information about your current financial commitments

Once you have selected the equipment, the lender may also require:

• A dealer invoice
• An auction listing
• Private seller details
• Equipment serial numbers
• An inspection or valuation for certain used assets

Established businesses may be asked for BAS, tax returns or financial statements for larger or more complex applications.

How Fast Can Equipment Finance Be Approved?

Straightforward equipment finance applications can be approved in as little as 24 hours once the required information has been provided.

Applications may take longer when they involve:

• A new ABN
• Limited financial information
• Older or specialised equipment
• A private sale
• Credit issues
• Tax debt
• A larger finance amount

Preparing your identification, bank statements and business information early can help prevent delays.

Equipment Finance or a Small Business Loan?

Equipment finance and small business loans can both provide business funding, but they are designed for different purposes.

Equipment finance is generally used to purchase a specific vehicle, machine or business asset. The equipment provides security for the loan.

A small business loan can provide funds for broader purposes, such as:

• Working capital
• Supplier payments
• Marketing
• Stock purchases
• Tax obligations
• Business expansion

When the funding is being used for a specific income-producing asset, equipment finance will often provide a more suitable structure. When the business needs flexible capital for several expenses, a business loan may be more appropriate.

TAFS can assess the purpose of the funding and explain which financial solutions may suit the business.

Frequently Asked Questions

How Does Equipment Finance Work for a Small Business?

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

The lender pays the approved funds to the equipment seller. The business takes ownership of the asset under a chattel mortgage and makes regular repayments until the loan has been repaid.

The equipment provides security for the finance, while the lender also assesses the business's ability to afford the repayments.

What Is the Best Equipment Finance for a Small Business?

The best equipment finance option depends on the asset, purchase price, business history, credit profile and available documentation.

TAFS compares suitable options through access to more than 80 lenders and uses an internal credit team to assess the application before formal submission.

Can I Finance Used Business Equipment?

Yes. Used equipment can be financed when purchased through a dealer, private seller or auction.

The lender will consider the age, condition, value and expected working life of the asset. Some equipment may require an inspection or valuation before settlement.

Can I Get Equipment Finance Without Full Financial Statements?

Yes. Low doc equipment finance may be available through selected lenders.

The application may be assessed using recent bank statements, ABN details, credit history and information about the equipment being purchased.

Eligibility depends on the business, loan amount, asset and lender requirements.

Do I Need a Deposit?

A deposit is not required for every equipment finance application.

Some businesses can qualify for finance covering the full purchase price. Other applications may require a deposit to reduce the lender's risk or improve the available options.

A trade-in can sometimes be used as the business's contribution.

Can Equipment Finance Include a Balloon Payment?

Yes. A balloon payment can be included in some chattel mortgage structures.

It reduces the amount repaid through regular installments but leaves a larger final payment at the end of the loan. The appropriate balloon will depend on the equipment, term and expected value of the asset at the end of the finance period.

How Quickly Can TAFS Arrange Equipment Finance?

TAFS can arrange approvals in as little as 24 hours for straightforward applications with the required information available.

Settlement timing will depend on the lender's final checks, finance documents and seller requirements.

Speak With an Equipment Finance Broker

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.

Ready to upgrade essential equipment for your business?

Start with a no-obligation assessment and a soft credit check that leaves no mark on your file. Contact The Asset Finance Shop or apply online at www.tafs.com.au.