Equipment Loans for Business: Complete Australian Finance Guide

Equipment loans for business allow Australian companies to finance machinery, tools, and commercial assets with terms typically ranging from 1-7 years. As of 2025, rates generally range from 6-12% p.a. depending on your business strength and asset type (rates are indicative only and subject to individual circumstances). Modern comparison platforms can provide fast online quotes, with settlements possible within days for straightforward applications (timeframes vary by lender and circumstances). Most traditional lenders require 12+ months trading history, though specialist lenders may consider newer businesses or alternative documentation. Potential tax benefits include immediate asset write-offs and GST claims, subject to your individual business structure and circumstances.

Whether you’re acquiring manufacturing machinery, construction equipment, or commercial vehicles, understanding your financing options helps you preserve working capital while accessing the equipment your business needs to grow.

Equipment finance has evolved significantly, with streamlined digital platforms now offering access to multiple lenders simultaneously. This means you can compare rates and structures efficiently, finding solutions that match your specific business circumstances and equipment requirements.

What Equipment Can Be Financed?

Australian businesses can finance virtually any commercial equipment or machinery that generates revenue or supports business operations. The asset itself typically serves as security for the loan, which often means more competitive rates than unsecured business finance.

Manufacturing and Industrial: CNC machines and lathes, industrial printing equipment, packaging machinery, forklifts and material handling equipment, conveyor systems, processing equipment

Construction and Trades: Excavators and earthmoving equipment, concrete pumps and mixers, scaffolding systems, power tools and equipment, cherry pickers and access equipment, surveying and testing equipment

Commercial Vehicles: Delivery trucks and vans, refrigerated transport, semi-trailers and prime movers, tipper trucks, service vehicles with fitouts. Learn more about specialised truck and commercial vehicle financing.

Medical and Healthcare: Diagnostic imaging equipment, dental chairs and instruments, pathology equipment, patient monitoring systems, surgical instruments, practice management systems

Hospitality and Retail: Commercial kitchen equipment, point-of-sale systems, refrigeration units, coffee machines and espresso equipment, display fixtures and shelving, security systems

Technology and IT: Servers and network infrastructure, computers and workstations, specialised software with hardware, telecommunications equipment, audio-visual systems

Agricultural: Tractors and harvesters, irrigation systems, grain handling equipment, livestock handling facilities, storage and silo systems

The key requirement is that equipment must be used primarily for business purposes (typically 51% or more business use) to qualify for commercial equipment finance and associated tax benefits.

Equipment Loan Rates and Costs

Equipment loan rates in Australia vary based on several factors including your business strength, the equipment type, loan amount, and term length. Understanding the full cost structure helps you make informed decisions.

Indicative Rate Ranges (2025)

Rates are indicative examples only. Actual rates depend on individual circumstances, lender assessment, equipment type, and current market conditions.

Rate Factors

Business Strength: Trading history and profitability, cash flow stability, credit history, business structure (company, sole trader, partnership)

Equipment Factors: New vs used equipment, equipment type and market value, resale value and marketability, asset age and expected useful life

Loan Structure: Loan amount and deposit contribution, term length, balloon payment inclusion, security offered

Additional Costs to Consider

Application Fees: Typically $0-$1,000 depending on lender and loan complexity

Establishment Fees: Usually $200-$1,500, often capitalised into the loan

Monthly Account Fees: Generally $5-$20 per month

Early Repayment Fees: May apply if you pay out the loan early (varies by lender)

Broker Fees: Often nil when using comparison platforms, as commissions are paid by lenders

Many modern platforms provide transparent cost breakdowns upfront, allowing you to compare equipment finance options across multiple lenders quickly.

How Equipment Finance Works

Equipment finance allows your business to acquire necessary machinery and tools without significant upfront capital outlay. The equipment itself typically serves as security, which can make this form of business lending more accessible than unsecured options.

Basic Process Flow

Understanding the equipment finance process helps you prepare effectively and move quickly when opportunities arise.

Step 1: Identify Equipment - Determine what equipment your business needs, obtain quotes from suppliers, consider new vs used options, and assess business impact and ROI.

Step 2: Compare Finance Options - Use online comparison tools to see rates from multiple lenders, review different loan structures (chattel mortgage, lease, hire purchase), calculate total costs including fees and interest, and consider tax implications for your business structure.

Modern comparison platforms allow you to see personalised equipment finance quotes from 100+ lenders without affecting your credit score.

Step 3: Submit Application - Provide business and equipment details, submit required financial documentation, supply equipment supplier quote or invoice, and share business trading history.

Step 4: Assessment and Approval - Lender reviews application and financials, equipment valuation may be conducted, credit assessment completed, and conditional approval provided (subject to final checks).

Step 5: Documentation and Settlement - Review and sign finance documents, provide any additional requested information, lender pays supplier directly, and you take possession of equipment.

Step 6: Ongoing Repayments - Regular monthly payments commence, optional balloon payment at term end, claim relevant tax deductions, and consider refinancing options as business grows.

Equipment Loan Structures Explained

Australian businesses can choose from several equipment finance structures, each with different ownership, tax, and flexibility implications. Understanding these differences helps you select the most suitable option for your circumstances.

Chattel Mortgage

The most common structure for equipment finance, chattel mortgages involve purchasing the equipment outright with borrowed funds, using the equipment as security.

How it works: You own the equipment from day one, equipment serves as security for the loan, make regular repayments (principal and interest), claim tax deductions on interest and depreciation, and optional balloon payment reduces monthly costs.

Best for: Established businesses seeking maximum tax benefits and eventual ownership

Learn more about chattel mortgage structures and benefits.

Hire Purchase

Similar to chattel mortgage but with key differences in ownership timing and tax treatment.

How it works: Financier owns equipment during the term, you have use and possession of equipment, ownership transfers after final payment, regular fixed repayments, and can claim depreciation and interest deductions.

Best for: Businesses wanting straightforward financing with eventual ownership

Finance Lease (Operating Lease)

Equipment lease where you don’t own the asset but can use it for the lease term.

How it works: Financier retains ownership, you lease the equipment for agreed term, payments may be fully tax deductible as operating expenses, options at term end: upgrade, return, or purchase, and generally no balloon payment.

Best for: Businesses wanting flexibility or regularly upgrading equipment

Commercial Hire Purchase

A variation designed specifically for commercial equipment with business use requirements.

How it works: Fixed repayments over agreed term, equipment must be primarily for business use (51%+), ownership transfers at end of term, GST often claimable upfront, and depreciation deductions available.

Best for: Businesses seeking straightforward purchase-focused financing

For businesses comparing various asset finance structures, modern comparison tools can show you which structure delivers the best outcome based on your specific circumstances.

Who Qualifies for Equipment Finance?

Equipment finance qualification criteria vary by lender, but general guidelines help you understand if your business is likely to be approved. Importantly, specialist lenders often have more flexible criteria than traditional banks.

Standard Qualification Guidelines

Trading History: Most traditional lenders require 12+ months trading history. Specialist lenders may consider businesses with 3-6 months history. Start-ups may need personal guarantees or additional security.

Business Financials: Demonstrable cash flow to service repayments, profitable trading preferred (though not always essential), reasonable debt-to-income ratios, tax returns or financial statements.

Credit History: Clean or near-clean credit profile preferred. Some adverse credit may be acceptable to specialist lenders. Recent defaults or bankruptcies may require specialist assessment. Payment history on existing commitments.

Equipment Requirements: Equipment must be primarily for business use (51%+), equipment value typically between $10,000-$5M+, asset must have reasonable resale value, new or used equipment considered (age limits vary).

ABN Holders and Self-Employed

If you’re self-employed or an ABN holder, equipment finance remains accessible, though documentation requirements may differ. Learn more about ABN loans and self-employed business finance options.

Alternative Documentation

Some lenders accept alternative documentation for newer businesses with limited trading history, self-employed applicants with variable income, and businesses with unique circumstances.

Acceptable alternatives may include: Bank statements showing cash flow, BAS statements, current customer contracts, asset valuations, and director guarantees.

Important Qualification Notes

These guidelines are general only. Every application is assessed individually, and specialist lenders often have more flexible criteria than traditional banks. If you’re unsure about your eligibility, we encourage you to compare your options or speak with our specialist brokers—there’s no such thing as a silly question, and exploring your options won’t affect your credit score.

Application Process and Documentation

Modern equipment finance applications can be streamlined and efficient, particularly when using comparison platforms that consolidate multiple lender options. Here’s what to expect.

Initial Comparison Stage

What you’ll need: Equipment details and supplier quote, approximate business age and turnover, desired loan amount and term, and basic contact information.

This initial stage typically takes just minutes and provides personalised rate comparisons from multiple lenders without affecting your credit score.

Full Application Documentation

Once you’ve identified suitable options, you’ll typically need:

Business Information: ABN/ACN details, business structure documentation, director/owner identification, business registration documents

Financial Information: Recent tax returns (typically 1-2 years), financial statements or BAS statements, bank statements (typically 3-6 months), existing debt or commitment details

Equipment Information: Equipment supplier quote or invoice, equipment specifications, new or used equipment details, intended business use confirmation

Additional Items (if applicable): Director guarantees, additional security details, business plans for newer businesses, insurance information

Timeframes

Although each lender has different timeframes and your circumstances will vary, modern streamlined systems allow for much faster processing than traditional approaches. Initial comparison typically takes minutes, application submission usually 10-30 minutes with documents ready, initial assessment often within 24-48 hours for straightforward applications, conditional approval may be provided within days (subject to verification), and settlement possible within days once all documentation finalised.

These timeframes are indicative only and depend heavily on application complexity, documentation completeness, and lender processes.

Tax Benefits of Equipment Finance

Equipment finance offers several potential tax advantages for Australian businesses, though the specific benefits depend entirely on your individual business structure, circumstances, and how you use the equipment.

Important: Tax benefits depend on your specific business structure and circumstances. The information below is general in nature only. Always seek independent advice from a qualified tax professional or accountant before making any financing decisions.

Potential Tax Deductions

Interest Deductions: Interest payments on equipment loans may be tax deductible. Applies to chattel mortgages, hire purchase, and some leases. Must be equipment used for business purposes.

Depreciation Deductions: Equipment depreciation may be claimed as a tax deduction. Depreciation rates vary by asset type. Applies when you own the equipment (chattel mortgage, hire purchase).

Lease Payment Deductions: Operating lease payments may be fully deductible. Treated as business operating expenses. Does not apply to chattel mortgages or hire purchase.

Instant Asset Write-Off

Eligible businesses may be able to claim immediate deductions for equipment purchases under the instant asset write-off scheme:

2025 Considerations: Thresholds and eligibility change regularly, may apply to new and some used equipment, business turnover requirements apply, and time-limited schemes often implemented by government.

Always verify current instant asset write-off rules with your accountant, as these provisions change frequently and have specific eligibility criteria.

GST Considerations

GST Input Tax Credits: Businesses registered for GST may claim input tax credits on equipment purchases, often claimable in the BAS period the purchase occurs, applies to the equipment purchase price, and can improve cash flow significantly.

Chattel Mortgage GST Benefits: Can claim GST input tax credit on full purchase price upfront, reduces initial cash outlay, and provides immediate tax benefit for GST-registered businesses.

Comparison with Cash Purchase

This comparison is for general information only and does not constitute tax advice.

For comprehensive understanding of how equipment finance structures affect your specific tax position, consult with your accountant before proceeding.

Traditional vs Streamlined Equipment Finance

The equipment finance landscape has evolved significantly, with modern comparison platforms offering substantial efficiency advantages over traditional application processes.

Traditional Bank Approach

Process: Visit bank branch or meet with business banker, receive single lender’s rates and terms, complete detailed application forms, submit physical documentation, wait for assessment (often weeks), limited transparency during assessment, approval subject to single lender’s criteria.

Timeframe: Typically 2-4+ weeks from application to settlement

Advantages: Face-to-face relationship, existing customer benefits possible, branch support available

Limitations: Single lender option only, potentially not the most competitive rate, longer processing times, more extensive documentation requirements, limited flexibility for non-standard scenarios

Streamlined Comparison Platform

Process: Online comparison in minutes, view rates from 100+ lenders simultaneously, digital application and document upload, automated initial assessment, specialist broker support available when needed, real-time application tracking, access to both mainstream and specialist lenders.

Timeframe: Although each lender has different timeframes and your circumstances will vary, streamlined systems allow you to get approved on an apples-for-apples basis much quicker than any other broker or direct bank option

Advantages: Multiple lender comparison, competitive rates through lender competition, faster processing with digital systems, access to specialist lenders for complex scenarios, transparent pricing and terms, flexible documentation options, technology plus human expertise when needed

Modern platforms like Loan Phone combine automated comparison technology with specialist broker expertise, giving you the best of both worlds—speed and efficiency for straightforward applications, with expert support available for complex scenarios.

Equipment Finance vs Other Options

Understanding how equipment loans compare to alternative funding methods helps you select the most suitable approach for your business situation.

Equipment Finance vs Business Loan

Rates are indicative examples only and depend on individual circumstances.

Explore general business loan options if you need flexible funding for multiple purposes.

Equipment Finance vs Cash Purchase

Financed Equipment Advantages: Preserves working capital, spreads cost over equipment’s useful life, potential tax advantages (interest deductibility), easier to upgrade equipment when term ends, predictable monthly cash flow

Cash Purchase Advantages: No interest costs, immediate ownership without debt, no ongoing commitments, flexibility to sell equipment anytime

Equipment Finance vs Lease

Finance to Own (Chattel Mortgage/Hire Purchase): You eventually own the equipment, claim depreciation deductions, can modify equipment as needed, asset remains on balance sheet, interest and depreciation tax deductions

Operating Lease: Lender retains ownership, easier to upgrade equipment regularly, payments may be fully tax deductible, off-balance sheet financing, flexibility at term end

The most suitable option depends on your business cash flow, tax position, equipment upgrade frequency, and specific circumstances. Many businesses find that asset finance structures offer the optimal balance of tax benefits and cash flow management.

Common Equipment Finance Questions

What’s the minimum equipment loan amount?

Most lenders start at $10,000, though some specialist lenders may consider smaller amounts. Maximum amounts typically range from $500,000 to $5M+ depending on the lender and your business strength.

Can I finance used equipment?

Yes, most lenders finance used equipment, though age restrictions apply (typically 10-15 years maximum age at end of loan term). Used equipment may attract slightly higher rates due to depreciation considerations.

Do I need a deposit?

Not always. Many equipment loans offer 100% finance, meaning no deposit required. However, providing a deposit (typically 10-20%) may result in more competitive rates and better terms. Your specific circumstances determine what’s available.

Can start-ups get equipment finance?

Yes, though requirements differ from established businesses. Start-ups may need director personal guarantees, larger deposits (20-30%), additional security, detailed business plans, and previous industry experience. Specialist lenders are often more accommodating of newer businesses than traditional banks.

What if I have less-than-perfect credit?

We encourage you to do a comparison or speak with our brokers, regardless of credit history. While traditional banks may have stricter requirements, specialist lenders often consider nature and timing of credit issues, current business trading, asset quality and security, and recent payment conduct.

Remember, qualification guidelines are general only, and many specialist lenders have flexible criteria.

Can I pay out the loan early?

Most equipment loans allow early repayment, though early exit fees may apply depending on your loan terms. Some lenders offer penalty-free early repayment options. Review your loan agreement for specific terms.

What happens at the end of a balloon payment loan?

You have several options: pay the balloon amount and own equipment outright, refinance the balloon into a new loan, trade-in equipment and finance new equipment, or sell equipment and use proceeds to clear balloon.

How does equipment finance affect my balance sheet?

This depends on the finance structure. Chattel mortgage/hire purchase: Asset and liability appear on balance sheet. Operating lease: May be off-balance sheet (depending on accounting standards). Consult your accountant for specific implications for your business.

Can I claim GST on financed equipment?

If your business is GST-registered, you can typically claim the GST input tax credit on equipment purchases. With chattel mortgage structures, you can often claim the full GST credit upfront, improving cash flow significantly.

What insurance is required?

Most lenders require comprehensive insurance on financed equipment to protect their security interest. Insurance costs should be factored into your total cost calculations. Some lenders can arrange insurance as part of the finance package.

Can I upgrade equipment before the loan ends?

Yes, though it typically involves refinancing. Many businesses refinance existing equipment loans to upgrade to newer equipment, rolling any remaining balance into the new loan. This is particularly common with technology and machinery that becomes outdated.

How does equipment finance differ from asset finance?

Equipment finance is essentially a subset of asset finance, specifically focusing on business equipment and machinery. Asset finance is the broader category encompassing equipment, vehicles, and other commercial assets used as security for business loans.

Get Equipment Finance for Your Business

Whether you’re acquiring manufacturing machinery, construction equipment, commercial vehicles, or specialised tools, modern comparison platforms make it simple to find competitive equipment finance options.

Why Choose Loan Phone

Fast Online Comparison - See personalised rates from 100+ lenders in minutes

Multiple Finance Structures - Compare chattel mortgage, hire purchase, and lease options

Specialist Lender Access - Solutions for start-ups, growing businesses, and complex scenarios

Expert Support Available - Specialist brokers ready to help when you need guidance

Transparent Pricing - Clear breakdown of rates, fees, and total costs upfront

Efficient Processing - Streamlined digital application with fast turnaround times

Free, No Credit Impact - Use our comparison tool with no effect on your credit score

Next Steps

Speak with specialists:

Whether you’re a sole trader acquiring your first major equipment purchase, an established manufacturer upgrading production machinery, or a construction company expanding your fleet, streamlined comparison gives you confidence you’re securing competitive terms while preserving valuable working capital for your business operations.

Related Resources

Loan Phone
www.loanphone.com.au | loans@loanphone.com.au

Last updated: October 2, 2025