Equipment Finance

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What is Equipment Finance?

Equipment finance is the term for the various types of business loans or commercial lease used to purchase or rent assets for a business. Equipment finance can be used to buy new business assets or replace and upgrade existing assets in all industries - with so many ways to apply, the hardest part is figuring out which equipment finance solution suits you best.


In this equipment finance guide, you’ll learn:

  • How to apply for equipment finance
  • The documentation you will need to apply
  • The types of assets you can purchase with equipment finance
  • The different types of business loans and leases available
  • How to compare equipment finance interest rates, lenders, and loan terms.

Who can get Equipment Finance?

Qualifying for equipment finance is relatively simple. Most equipment finance lenders will be able to provide plenty of options if you have:

  • Been trading for at least 12 months; and
  • Have an ABN (Australian Business Number); and
  • Are registered for GST.

Although the process will be a little more involved, you can still get equipment finance if you:

  • Are self-employed
  • Are a sole trader
  • Have been trading for less than 12 months
MONEY TIP

You can also use equipment finance to upgrade or replace existing equipment for your business.


A business owner will commonly consider applying for equipment financing when they don’t have the cashflow or security to purchase expensive equipment outright, but they may also choose equipment if they:

  • Need to replace equipment frequently because it has a short lifespan
  • Work in an industry that requires constantly up-to-date technology
  • Want to purchase an asset for everyday business use and reclaim the GST on their next BAS
  • Require cash reserves for future business security, and would prefer to pay for assets by installments over a set period.
MONEY TIP

Protect your cash reserves and pay for equipment through installments, remembering all interest is tax deductible.

Who can I talk to about Equipment Finance?

Most banks will offer equipment finance options to their customers. Otherwise, you could choose to work with a finance broker, who will help manage your application process.


There are also ways you can apply online, including:

  • Non-Bank Lenders
  • Specialist Asset Finance Lenders
MONEY TIP

You can usually get a quicker approval on equipment finance loans from a non-bank, specialist asset finance lenders, or through equipment finance brokers than your bank.

How do I apply for Equipment Finance?

Some lenders have a simple, online application process for their equipment finance solutions, and offer conditional approval on the spot. Others will ask you to contact them for a quote, and then speak to you to progress your application.


Each lender will have different equipment finance options, rates and approval criteria, such as:

  • Loan interest rates and terms
  • Minimum and maximum loan amounts
  • Equipment finance that can only be used for certain assets.

If you don’t want to apply directly to your bank or non-bank lender, you can speak to an equipment finance broker who will handle the process for you in return for a small fee.

MONEY TIP

Use an equipment finance broker to get you the best equipment finance interest rate and finance package.

What is the Equipment Finance Application process?

There are two main types of applications for Equipment Finance. The first, and easiest to gain approval through, is the Streamlined Application process.


You’ll qualify for a streamlined application process if you are:

1. Buying a vehicle to the value of $150,000 and you:
  • have been in business 12 months; and
  • have an ABN; and
  • are registered for GST; and
  • are currently renting and can provide a 20% deposit; or
  • own a home.
2. Buying any non-vehicle goods and assets up to a total value of $100,000 and you:
  • have been in business 24 months; and
  • have an ABN; and
  • are registered for GST; and
  • are currently renting and can provide a 20% deposit; or
  • own a home.

Provided you can supply the appropriate documents to your lender and have a good credit history, you’ll likely be approved for your application.

In all other instances than the two described above, you’ll need to go through a standard finance application.

MONEY TIP

If you own a home, you won’t need to put down a deposit on your equipment finance assets as you would if you were renting.

Streamlined Loan Application versus Standard Loan Application

Asset versus Time in business 6 months 12 months 24 months
Company vehicles under $150k Standard Loan Process Streamlined Loan Process Streamlined Loan Process
Company vehicles over $150k Standard Loan Process Standard Loan Process Standard Loan Process
Non-vehicle assets under $100k Standard Loan Process Standard Loan Process Streamlined Loan Process

What is a standard equipment finance loan application?

A Standard Equipment Finance Loan describes a loan where the application falls outside the streamlined approval criteria, either due to the cost of the asset the business wishes to purchase, or due to the liability a particular asset may present to a lender.

How does a Standard Loan work?

The standard loan process is a little more involved than the streamlined process, because you’ll need to provide a lot more information to get approved. Here’s how you can get approved if your equipment finance application sits outside the “extremely comfortable” criteria for financing approval with lenders:

  • Demonstrate the ability to service your equipment loan or lease.
  • Meet the lender’s criteria, such as:
    • An ABN and GST registration
    • An acceptable credit rating
    • A minimum level of turnover
    • A maximum level of other debt
  • Supply all your supporting documents, such as:
    • Proof of identity
    • Financial records (provided by your accountant)
      • Profit and Loss Statements
      • Balance Sheet
    • Details of the asset you wish to purchase
    • Business bank statements
    • Rates notice (if you own a home)
    • Rental agreement (if you are renting)

What assets and equipment can I finance for my business?

If you qualify for equipment finance with a lender, you can finance almost any asset related to your business. This can include:

  • Vehicles - e.g. company cars, trucks, trailers, delivery vans, motorcycles
  • Electronics - e.g. computers, servers, GPS equipment
  • Machinery - e.g. excavators, lifts and access equipment, forklifts
  • Equipment - e.g. printing, medical, dental, engineering
  • Construction - e.g. tools, tool of trade vehicles, scaffolding
  • Earthmoving - e.g. yellow goods, machinery, diggers, front loaders

To see a full list of business equipment that you could finance, click here.

MONEY TIP

Not all assets have to be objects. You can even use equipment finance for an office fit-out.

What types of Equipment Finance are available?

Just as every business is unique and your need for a loan or lease will vary, there are a number of different options available for equipment finance with lenders.


It’s important to know the differences to understand which is most suitable for you. You can quickly view the benefits and restrictions of each type of equipment finance in our comparison guide, and learn more about the various loans and leases below:

Equipment Finance Comparison Guide

Type of Finance Pros Cons
Chattel Mortgage Vehicle is classified as a business asset Any residual balance (balloon) is not tax deductible
Commercial Hire Purchase GST is not charged on the monthly rental or residual payment The lender can reclaim the asset if you don’t meet your payment obligations.
Finance Lease Your equipment does not sit on your books as an asset or liability Difficult for new businesses without much documentation.
Operating Lease Can be more cost effective than paying cash for equipment with a short lifespan Your business won’t own the asset through an operating lease.
Unsecured Business Loan Quick approval timeframe Expensive

Chattel Mortgage (or Secured Loan Agreement)

What is a Chattel Mortgage?

A Chattel Mortgage is a commercial finance product where the customer takes ownership of the asset - the ‘chattel’ - at the time of purchase.

How does a Chattel Mortgage work?

Under a Chattel Mortgage the lender advances funds to the customer to purchase an asset, such as a vehicle, which the customer then owns.


The lender registers their interest over the asset with the PPSR (Personal Property Securities Register) takes a 'mortgage’ over the asset as security for the loan. Once the contract is completed, the security interest is removed giving the customer full ownership.

Chattel Mortgage (or Secured Loan Agreement) Information

Pros Cons
  • Immediate ownership of the vehicle (once paid)
  • The vehicle is recognised as an asset to the business
  • Fixed interest rates and monthly repayments
  • Can claim back the GST in the very next BAS
  • Monthly instalments and the residual balance (balloon) are not tax deductible (these deductions are only available when leasing a car)
  • Accounting work involved in claiming GST and deductions can involve more work than using a business lease option
  • The business is paying interest on a vehicle as opposed to paying cash and owning it outright

Commercial Hire Purchase

What is a Commercial Hire Purchase?

A Commercial Hire Purchase - or Corporate Hire Purchase, CHP, or HP - is a commercial finance product where the customer hires the asset from the lender for a fixed monthly repayment over a set period of time.

A CHP is a good choice for businesses registered for GST on a cash accounting basis, as the owner should be able to claim the GST on the vehicle’s purchase price as an Input Tax Credit on their next Business Activity Statement.

How does a Commercial Hire Purchase work?

Under a Commercial Hire Purchase arrangement the lender agrees to purchase the asset - such as a vehicle - on behalf of the customer, who will then hire the asset from the lender over a set period of time.

The customer has the use of the vehicle for the term of the contract but is not the owner of the vehicle. At the end of the contract term when the total price of the vehicle (minus any residual) and the interest charges have been paid in full, the customer takes ownership of the asset.

Commercial Hire Purchase Information

Pros Cons
  • Flexible contract terms ranging from 12 to 60 months (one to five years)
  • Residual value (balloon or final instalment) may be placed on contract
  • Fixed interest rate and monthly repayments
  • A tax deduction is available when the vehicle is used for business purposes
  • GST is not charged on the monthly rental or residual payment (but is charged on fees and interest)
  • Customers registered for GST may be able to claim the GST in the asset price, fees and interest
  • You’ll pay more over time for the asset you are financing through hire purchase than if you bought it outright.
  • You won’t own the asset until you have made the final hire purchase payment. The lender can reclaim the asset if you don’t meet your payment obligations.
  • Because your business doesn’t technically own the asset, it won’t be protected if you’re made bankrupt.

Finance Lease For Equipment Finance

What is a finance lease?

A finance lease enables the customer to have the use of an asset (business equipment) and the benefits of ownership, while the lender retains actual ownership of the asset.

How does a finance lease work?

The lender will purchase the asset on behalf of the customer, who then pays the lender a fixed monthly lease rental for the term of the lease.


This means the customer has the asset on their balance sheet, and their repayments to the lender are tax deductible. At the end of the lease the asset is returned to the lender or often can be purchased by the customer for business at an agreed price.

Finance Lease For Equipment Finance Information

Pros Cons
  • Flexible contract terms
  • Fixed interest rates and monthly lease rentals
  • Your equipment does not sit "on your books" as an asset/liability
  • Tax deductions for the lease payments may be claimed
  • As the GST contained in the equipment's purchase price may be claimed back by the lender, only the equipment's price exclusive of GST is financed, lowering monthly payments
  • Your business won’t own the asset, which means you cannot use it for business tax benefits.
  • Even though you’re leasing the asset instead of using a loan, you still might pay interest.
  • Difficult for new businesses without plenty of supporting documentation.

Operating Lease (or Rental Agreement)

What is an Operating Lease (or Rental Agreement)?

An Operating Lease, or Equipment Rental Agreement is an agreement between a lender and a customer where the lender will purchase equipment on behalf of the customer and rent it out to them over a period of time.

How does an Operating Lease (or Rental Agreement) work?

An Operating Lease is similar to most types of rental agreement - your business makes fixed monthly payments to use the asset - but generally involves the customer being able to purchase the equipment from the lender at the end of the rental period.

The customer simply makes fixed monthly rent payments, and at the end of the contract either hands back the equipment to the lender (with no more to pay), continues the rental agreement, or buys the equipment outright at market value.

If the business chooses not to purchase the equipment outright, they will need to sign another lease to continue using the asset. This may not be suitable if the terms on the lender’s rental agreement change.

Operating Lease (or Rental Agreement) Information

Pros Cons
  • Flexible contract terms
  • Fixed interest rates and monthly lease rentals
  • Costs are known in advance
  • Can be more cost effective than paying "cash", especially for equipment that has a short lifespan
  • A residual can be applied in some cases, lowering monthly payments
  • Your equipment is "off balance sheet"
  • Rental payments may be claimed as a tax deduction, which may be more tax effective than other forms of finance.
  • Rented equipment is not considered to be a business asset (or the debt a business liability)
  • The business can’t sell or modify the asset without the lessor’s permission.
  • When the lease expires, the terms of that lease are void. The business may need to renegotiate the lease with the lender each time.
  • Businesses using assets through an operating lease record the lease on their books - this expense reduces the company’s net income.

Unsecured Business Loan for Equipment Finance

What are Unsecured Business Loans for Equipment Finance?

Unsecured business loans allow a business to acquire funds from a lender without providing collateral. Collateral is used as security for loan repayment and could include your home, vehicle, personal savings, and more. The lack of collateral on an unsecured business loan is often reflected by higher interest rates.

How does an Unsecured Business Loan work?

An unsecured business loan is supported only by the credit rating and trustworthiness of the borrower. Unlike a secured business loan, the lender cannot claim assets should you be unable to meet your repayment.


However, you will still need to meet lender criteria - such as assessing income and credit rating - and some lenders may ask for a personal guarantee from the directors of the business.


Unsecured business loans are a good option for small businesses with limited cash flow, looking to invest in equipment that they wish to own following the completion of their payments to the lender.

Unsecured Business Loan for Equipment Finance Information

Pros Cons
  • Flexible repayments (some lenders allow you to repay the loan faster by making extra payments without penalties or fees)
  • Cashflow-friendly repayment plans (daily, weekly, fortnight or monthly to match your sales revenue)
  • Very fast access to cash (typically on the same day)
  • Ownership of equipment purchased
  • Using the equipment for your business could reduce your tax payments
  • Quick approval timeframe
  • Expensive
  • Not suitable for assets with a short lifespan.

What are the interest rates on Equipment Finance?

Equipment Finance Rates Comparison

Type of Finance Interest Rates Term (Length of Loan)
Chattel Mortgage From 5.49% Up to 5 years
Commercial Hire Purchase From 4.49% 3 - 5 years
Finance Lease From 4.49% 3 - 5 years
Operating Lease (Rental Agreement) From 5.10% Up to 5 years
Unsecured Business Loan From 9.90% Up to 3 years

Equipment Finance Summary

Equipment finance in Australia is used by businesses to buy new assets or replace and upgrade existing assets for the business. There are many different methods of obtaining equipment finance, and each will offer varying interest rates, term lengths, and fees. Certain lenders may only offer certain types of equipment finance, or have specific conditions about what can be funded.


In summary, equipment finance:

  • Can be used to finance anything relating to a business
  • Does not require a deposit in most cases
  • Can be used to purchase equipment outright
  • Can be used to lease or rent equipment from a lender
  • Can be obtained from banks, non-bank lenders, specialists, and through finance brokers
  • Can provide financing solutions to businesses with bad credit
  • Covers different types of loan or lease, each with their own pros and cons

Equipment Finance for Businesses FAQ

Will I need to put down a deposit for equipment finance?

If you own a home, you won’t need to put down a deposit for equipment finance. If you’re renting a home and want to apply for equipment finance through the streamlining application process, you’ll need a 20% deposit for the assets you wish to finance.

What is a Self-Declaration Loan?

A self-declaration loan is a type of equipment finance for business where the applicant is unable to provide proof of income or financial statements for various reasons, such as the revenue of a business is difficult to calculate.

Each lender’s assessment process will be slightly different from a streamlined or standard loan application, which may involve them running a credit check or requiring you to present a trust deed or partnership agreement.

Self-Declaration Loans may also come with higher interest rates or stricter conditions than a standard loan.

What is Low Doc Loan?

Low Doc (Low Documentation) loans are for potential borrowers who are self-employed or own a small business can’t supply the required documents to support their application to the lender.

Generally this will be a lack of PAYG payslip records or where the applicant cannot provide sufficient financial statements or tax returns.

Low Doc Loans may also come with higher interest rates or stricter conditions.

Can I use equipment finance to replace existing business assets?

Yes - equipment finance can be used for any assets that a business may need, whether you are buying new assets (a new company car), or upgrading existing assets (computer hardware and servers).

Is there a full list of available assets for business equipment finance?

Below is a full list of assets that you can purchase or lease through equipment finance. Each lender may have a different list of approved assets, so speak to your bank, lender, or broker about what you can finance for your business.


Complete asset list for business equipment finance loans and leases
Vehicles and machinery? Equipment and Tools Storage, Setup and Security
Cars / Light Commercial vehicles Camper trailers Information technology and data storage equipment
Caravans Generators, welders, and pumps Building management systems
Motorcycles Printing equipment Office fit-outs
Small and medium trucks Medical and dental equipment Manufacturing line equipment
Trailers Engineering equipment Sheds and silos
Prime movers - i.e. cement mixers, tippers, local transport vehicles Workshop equipment Moulding equipment for plastics
Buses Long-haul freight equipment Concrete batching plants
Earthmoving equipment - i.e. excavators, bulldozers, graders, crushing equipment Mining equipment Cabins for caravan parks
Material handling equipment - i.e. forklifts, cranes, container lifts. Agriculture equipment and tools Coolrooms
Access equipment - i.e. boom and scissor lifts. Food processing or food manufacturing equipment Spray booths
Mulchers, wood chippers, and stump grinders Woodwork equipment - i.e. panel saws, banders, routers, and lathes. GPS equipment
Mowers, tractors and trailer attachments. Dynamometers Commercial HVAC (heating, ventilation, air-conditioning) systems
Agriculture machinery, such as harvesters and headers AV (audio visual) equipment
Forestry equipment