Business equipment finance lets companies acquire machinery and technology without a large upfront payment. Common structures include chattel mortgages, finance leases and operating leases. Deposits usually range from 10 to 30 per cent, while terms run from one to seven years. Many applications are approved within 24 to 48 hours, allowing businesses to keep working capital free.
For local buyers, business equipment finance comparison Compare rates and structures to secure the best deal for your business.
Business Equipment Finance Comparison Explained
Buying machinery outright ties up cash that a growing business usually needs for wages, stock and day-to-day operations. Funding the purchase spreads the cost over the useful life of the asset, so the equipment earns its keep while the repayments are made. According to The Loan Phone, established businesses can finance up to 100 per cent of equipment costs, which means little or no deposit is needed in the right circumstances.
The other driver is tax. With a chattel mortgage the business can claim the GST on the purchase upfront, claim depreciation on the asset, and deduct the interest portion of the repayments. The instant asset write-off may also apply. These outcomes depend on your situation, so the figures should always be confirmed with your accountant.
Common Finance Structures Explained
There is no single right structure. The choice depends on whether you want to own the asset, how you treat it for tax, and whether the equipment dates quickly. The four options used most often are set out below. business equipment finance options vary by structure.
A chattel mortgage means you own the equipment from day one and make regular repayments, with an optional balloon payment at the end to lower the monthly cost. A finance lease means the financier owns the asset during the lease; you make payments and can buy, extend or return it at the end of the term. An operating lease is suited to assets that need regular upgrades, where the financier keeps ownership and you lease for a set period. A commercial hire purchase means you pay in instalments and take ownership once the final payment is made, which suits full-financing needs.
What Can You Finance?
Equipment loans cover a broad range of business assets. Lenders regularly fund manufacturing and industrial machinery such as CNC machines, presses and welding gear. They also fund construction and earthmoving plant including excavators, loaders and cranes. Agricultural machinery, medical and dental equipment, commercial kitchen and refrigeration gear, and technology such as servers, point-of-sale systems and telecommunications hardware are all common funding targets.
Quality used equipment can usually be funded as well, with age limits that vary by asset type but commonly extend to around ten years old. This flexibility allows businesses to upgrade fleets or expand operations without the burden of a large capital outlay.
Lender Requirements and Approval
When assessing an application, lenders weigh the trading history of the business, the type and resale value of the asset, and the proposed deposit. A finance broker who knows asset values and lender appetites can match the request to the lenders most likely to approve it.
Deposits typically sit between 10 and 30 per cent, although established businesses with a strong trading history may secure up to 100 per cent financing. Loan terms generally run from one to seven years, set against the expected useful life of the asset so the repayments roughly track its value over time. Speed is often the deciding factor when a supplier deal is on the table. Many equipment applications are approved within 24 to 48 hours, and once approved the broker coordinates with the supplier so delivery and settlement run smoothly. Most lenders require comprehensive insurance on the funded asset to protect their security interest, so factor that into the running cost.
- Assess your needs. Set out the equipment type, cost, whether it is new or used, and how the business will use it.
- Get matched with specialists. A broker who understands equipment values and lender appetites connects you with suitable finance providers.
- Compare the structures. Review chattel mortgage, finance lease, operating lease and commercial hire purchase, weighing ownership, tax and cost.
- Settle and take delivery. Once approved, the broker coordinates with the supplier so delivery and settlement of the equipment run smoothly.
| Structure | Ownership | Best suited to |
|---|---|---|
| Chattel mortgage | Your business, from day one | Owning the asset and claiming GST upfront |
| Finance lease | The financier, during the term | Lower upfront cost with an end-of-term choice |
| Operating lease | The financier | Equipment that needs regular upgrades |
| Commercial hire purchase | You, after the final payment | Full financing with eventual ownership |
Common questions
How much deposit do I need for business equipment finance? Deposits typically range from 10 to 30 per cent, but some lenders offer up to 100 per cent financing for established businesses with a strong trading history.
Can I finance used equipment? Yes. Most lenders fund quality used equipment, with age limits that vary by asset type but commonly extend to around ten years old.
How fast can I get approved? Many equipment applications are approved within 24 to 48 hours, allowing you to act quickly on supplier deals.
This guide provides a comparison of business equipment finance options for Australian businesses.