What Is Equipment Finance? A Plain English Guide for Australian Businesses

If you run a business in Australia, you have almost certainly needed a truck, a ute, a machine or a piece of kit that costs more than you want to pull out of the bank account. That is what equipment finance is for.

Equipment finance is a type of business lending used to buy or lease assets that help you earn income. The asset itself usually acts as security. That is why approvals can be faster and deposits can be lower than a standard business loan.

What can you finance?

Almost any income-producing asset. Common examples include:

• Commercial vehicles – utes, vans, trucks, trailers
• Construction and earthmoving plant
• Workshop, manufacturing and warehouse machinery
• Medical, dental and allied health equipment
• Hospitality fit-outs, coolrooms and kitchen gear
• IT, technology and office equipment

How equipment finance works

You choose the asset. A broker or lender assesses your business, the asset and the structure. Once approved, the financier pays the supplier and you repay over an agreed term – typically two to five years, sometimes longer on heavier plant.

Most deals in Australia sit in one of three structures: chattel mortgage, finance lease or hire purchase. The difference is who owns the asset, how GST is treated, and what you can claim for tax. That choice matters more than most people think.

Why businesses use it instead of cash or a bank overdraft

Cash in the bank is working capital. Once you spend it on a $180,000 excavator, it is gone. Equipment finance keeps that cash available for wages, materials and the quiet months. The asset is also depreciating whether you paid cash or financed it – so many owners prefer to match the repayment to the working life of the gear.

Who it suits

Established companies with clean financials get the sharpest rates. But equipment finance is also used by sole traders, new ABNs, and businesses that a major bank would knock back for an unsecured loan. Specialist lenders look at the asset and the story, not just last year’s tax return.

What lenders actually look at

Time in business, ABN and GST status, credit file, the type and age of the asset, and how you will repay it. New gear from a recognised brand is easier than a private-sale 12-year-old machine. That does not mean used gear cannot be done – it just changes the lender and the structure.

If you are comparing options in Brisbane or anywhere in Queensland, start with the asset and the cash-flow outcome you want. The product name comes second.

Need a second opinion on a deal? Call Tom on 0400 710 877 or email [email protected]. Rockliff Finance – equipment finance for Australian businesses, based in Brisbane.