By the Loan Phone team Reviewed by Anthony Moncada, M.App.Fin, Cert IV Finance & Mortgage Broking
Machinery loan options provide Australian businesses with financing for industrial equipment, allowing you to acquire essential assets without large upfront capital. In Australia, rates typically range from 7-15% p.a. (indicative only), loan amounts from $20,000 to $2M+, with terms of 2-7 years depending on equipment type. Modern platforms can provide fast online comparison, with settlements possible within 7-14 business days for straightforward applications.
Most traditional lenders require a minimum 12 months trading history and strong business financials, though specialist lenders may consider newer businesses. Potential tax benefits include depreciation deductions and GST credits (subject to individual circumstances).
| Business/Borrower Profile | Indicative Rate | Typical Term | Common Machinery Types |
|---|---|---|---|
| Established (3+ years, strong) | 7-10% p.a. | 3-7 years | Manufacturing, heavy industrial |
| Standard (1-3 years) | 10-13% p.a. | 2-5 years | Agricultural, construction |
| Developing/Newer | 13-15%+ p.a. | 2-4 years | Basic or specialized machinery |
Rates are indicative examples only. Actual rates depend on individual circumstances and lender assessment.
📄 Navigation Guide
- → What are Machinery Loans?
- → Types of Machinery Finance Available
- → Eligibility Requirements for Machinery Loans
- → Machinery Loan Application Process
- → Machinery Loan Rates & Fees
- → Tax Benefits of Machinery Financing
- → Machinery Loan vs Equipment Finance
- → Choosing the Right Machinery Loan Option
- → Frequently Asked Questions
What are Machinery Loans?
Machinery loans are specialized financing products designed for businesses purchasing industrial, manufacturing, agricultural, or construction equipment. Unlike general business loans, these loans are secured by the machinery itself, which typically results in more favorable interest rates. They enable businesses to acquire high-value assets by spreading the cost over the equipment’s useful life, preserving essential working capital.
Types of Machinery Finance Available
- Chattel Mortgage: The most popular structure where the business takes immediate ownership of the machinery, and the lender takes a mortgage over it as security.
- Finance Lease: The financier owns the equipment and leases it to the business. At the end of the lease, you have flexible options like purchasing, returning, or extending the lease.
- Hire Purchase: Ownership of the machinery transfers to your business after the final payment is made.
- Operating Lease: A short-term rental agreement for using equipment without any intention to purchase, ideal for technology that becomes obsolete quickly.
Eligibility Requirements for Machinery Loans
While criteria vary, most lenders require:
- Active ABN: Your business must be registered and operating in Australia.
- Trading History: A minimum of 12-24 months is preferred by most traditional lenders.
- Financial Standing: A history of positive cash flow and a good credit record.
- Business Use: The machinery must be primarily for business purposes (typically 75% or more).
- Industry Specifics: Some industries like construction or mining may have additional safety and compliance requirements.
Machinery Loan Application Process
Modern platforms have streamlined the process:
- Research & Compare: Use a comparison tool to see options from multiple lenders.
- Online Application: Complete a digital application with your business and machinery details.
- Upload Documents: Securely provide bank statements, quotes, and identification.
- Assessment: Lenders assess your application, which can take 3-5 days for straightforward cases.
- Settlement: Once approved and all documentation is signed, settlement typically occurs within 7-14 business days.
Machinery Loan Rates & Fees
- Interest Rates: Indicative commercial rates range from 7-10% p.a. for established businesses to 13-15%+ p.a. for newer or higher-risk applicants.
- Fees: Expect an establishment fee (typically $300 - $1,500) and potentially a small monthly account-keeping fee. Always ask about any early termination fees.
Tax Benefits of Machinery Financing
Financing machinery can offer significant tax advantages:
- Depreciation: If you own the asset (e.g., via a chattel mortgage), you can claim depreciation, including potential eligibility for the Instant Asset Write-Off.
- GST Credits: GST-registered businesses can typically claim the GST on the purchase price as an Input Tax Credit.
- Interest Deductibility: The interest paid on the loan is generally a tax-deductible business expense. Important: Always consult your accountant for advice specific to your business structure and circumstances.
Machinery Loan vs Equipment Finance
While often used interchangeably, there’s a subtle difference. Machinery Loans typically refer to finance for heavy, industrial, or specialized equipment (e.g., CNC machines, combine harvesters). Equipment Finance is a broader term that can also include lighter assets like IT hardware, office furniture, or retail POS systems. For high-value, specialized assets, a dedicated machinery loan from an industry-specialist lender can often result in better terms.
Choosing the Right Machinery Loan Option
The best choice depends on your business needs:
- For Ownership: A chattel mortgage is ideal if you want to own the asset from day one and benefit from depreciation.
- For Flexibility: A lease is better if the machinery becomes outdated quickly, as it allows for easy upgrades at the end of the term.
- For Cash Flow: An operating lease generally offers the lowest monthly payments.
Frequently Asked Questions
What is the minimum amount I can borrow for machinery finance? Most lenders start at around $20,000 for specialized machinery loans, reflecting the higher value of these assets. For smaller needs, standard equipment finance may be more suitable.
How long can I finance machinery for? Terms typically range from 2 to 7 years. The term is often aligned with the machinery’s expected useful life, with longer terms available for durable, high-value equipment.
Can I finance used machinery? Yes, though age limits (often 5-7 years) and higher deposit requirements may apply. Interest rates might also be slightly higher compared to new machinery.
What documentation do I need for a machinery loan application? You will generally need your ABN, business registration documents, recent financial statements or bank statements, and a quote or invoice for the machinery you intend to purchase.
Can I get machinery finance if I have a bad credit history? It is possible, particularly through specialist lenders. Because the loan is secured against the machinery, it’s often more accessible than an unsecured loan, although you should expect a higher interest rate.
Speak with Specialists
Need expert guidance on your machinery loan application?
Email: loans@loanphone.com.au Website: www.loanphone.com.au
Related Resources
Explore these related guides to learn more about asset financing options:
Disclaimer: This article provides general information only and should not be relied upon as financial or tax advice. Rates, terms, and eligibility vary by lender and individual circumstances. Tax benefits are subject to your specific business structure and circumstances. Always seek independent professional advice from a qualified accountant and financial adviser before making financing decisions.
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Last updated: October 17, 2025