Unlock the secrets to buying new business equipment

When you need to buy equipment but cash is tied up elsewhere

Buying new equipment outright means depleting your working capital at exactly the moment your business needs flexibility. Equipment finance allows you to acquire what you need now while spreading the cost over time, so your cash reserves stay available for wages, stock, and unexpected opportunities.

Consider a manufacturing business in Dandenong that needed a CNC machine to take on larger contracts. The equipment cost $85,000, but pulling that amount from the business account would have left them unable to cover materials for the first three months of those same contracts. Through a chattel mortgage, they financed the machine over five years with fixed monthly repayments, kept their cash flow intact, and claimed the full GST credit upfront along with depreciation deductions each year.

How equipment finance works without draining your bank account

You select the equipment, agree on a purchase price, and arrange finance for the full amount or a percentage of it. The lender pays the supplier, and you repay the loan amount over an agreed term, typically between two and seven years depending on the equipment's useful life. The equipment itself acts as collateral, which often makes approval more straightforward than an unsecured business loan.

Fixed monthly repayments mean you know exactly what's leaving your account each month, which makes budgeting and cashflow management more predictable. You can structure the loan to match your business cycle, and with some equipment finance options, you can include a residual or balloon payment at the end to reduce your regular repayments if that suits your situation.

The two main structures and when each one fits

A chattel mortgage suits businesses that want to own the equipment from day one and claim maximum tax deductions. You borrow to buy the asset, it appears on your balance sheet, and you claim GST input credits along with depreciation. Interest payments are tax deductible, and at the end of the term, you own the equipment outright after paying any residual.

A hire purchase means the lender owns the equipment until the final payment is made. You can't claim the GST upfront, but the repayments are still tax deductible, and ownership transfers to you at the end of the agreement. This structure can work if you want to keep the asset off your balance sheet or if your business structure doesn't allow for a chattel mortgage.

What you can finance beyond the obvious

Office equipment, IT systems, printing equipment, solar panels, work vehicles, forklifts, excavators, tractors, graders, cranes, and dozers all qualify. Manufacturing equipment, food processing lines, automation equipment, robotics, and material handling systems are also common. If the equipment has a clear commercial use and retains resale value, it's likely you can finance it.

Agricultural equipment and farming machinery are well suited to equipment finance because the seasonal nature of farm income makes fixed repayments over several years more manageable than a single upfront cost. A dairy operation in Gippsland recently financed a new milking system and feed mixer together as a single loan, which allowed them to upgrade technology across two parts of the business without waiting another year to save for the second piece.

How the tax treatment makes finance more effective than paying cash

When you finance equipment through a chattel mortgage, the interest component of each repayment is tax deductible. You also claim depreciation on the equipment each year, which reduces your taxable income. The combination often makes the after-tax cost of financing lower than the sticker price suggests, especially if your business is profitable and paying tax at the company rate.

If the equipment qualifies for instant asset write-off provisions or accelerated depreciation, you may be able to claim a significant deduction in the first year, which brings forward the tax benefit and improves your cash position sooner. Your accountant will confirm what applies to your situation, but the structure of equipment finance is built around making those deductions work in your favour.

What lenders look at when assessing your application

Lenders want to see that your business can service the repayments from its income. They'll review recent financial statements, bank statements, and tax returns to understand revenue, profit, and cash flow patterns. If your business is newer or has variable income, they may ask for a larger deposit or a director's guarantee.

The equipment itself matters too. Lenders prefer assets that hold value and have a clear resale market, which is why standard vehicles, machinery, and IT equipment are usually straightforward to finance. Highly specialised or custom-built equipment may require more documentation or a higher deposit because it's harder to resell if something goes wrong.

How quickly you can move from quote to equipment delivery

Once you've chosen your supplier and received a quote, an equipment finance application can be assessed within a few business days if your financials are current and the equipment is standard. Approval depends on the lender reviewing your business information, but the process is often faster than applying for a traditional business loan because the equipment itself acts as security.

After approval, the lender arranges payment directly to the supplier, and you take delivery. The whole process from application to equipment arriving on site can take as little as a week for straightforward transactions, though custom orders or imported equipment will depend on the supplier's lead time rather than the finance approval.

When upgrading existing equipment makes more sense than repairing

If your current machinery is costing more in downtime and repairs than a monthly finance repayment would, upgrading becomes a cashflow decision rather than a capital one. Older equipment also tends to be less efficient, whether that's fuel consumption in vehicles, power usage in manufacturing, or processing speed in IT systems.

Financing the upgrade means you're not waiting until the old equipment fails completely, which can leave you scrambling for a solution or losing contracts because you can't meet deadlines. You can plan the transition, take advantage of trade-in value while the old equipment still has some, and keep your business running without interruption.

Why working with a broker gives you more options across lenders

Different lenders have different appetites for different equipment types and business structures. Some specialise in agricultural machinery, others in transport or IT, and some won't finance certain categories at all. A broker has access to equipment finance options from banks and lenders across Australia, which means you're not limited to what one bank offers or stuck with terms that don't suit your business needs.

We also handle the paperwork, compare interest rates and fees, and structure the loan to match your cashflow. If your business has complex income patterns or you're financing multiple pieces of equipment at once, having someone who knows which lender to approach saves time and often results in better terms than going direct.

Call one of our team or book an appointment at a time that works for you. We'll talk through what equipment you're looking to acquire, how you'd like the repayments structured, and which finance option aligns with where your business is headed.

Frequently Asked Questions