Equipment Finance for New Businesses: Startup Guide Australia

Quick Answer

Equipment finance for new businesses in Australia typically involves securing loans like chattel mortgages or hire purchase agreements to acquire essential assets without significant upfront capital. While traditional lenders often require a minimum of two years trading history, specialist equipment financiers and non-bank lenders may offer solutions for businesses operating with a new ABN or less than 12 months trading, often through low-doc options. Indicative rates in 2026 typically range from 9-14%+ p.a. (indicative only) for new operations, with terms from 1-5 years. Comparison platforms like Loan Phone help new businesses access and compare tailored options from 100+ lenders, navigating the unique eligibility criteria to secure vital assets for growth.

Rates are indicative examples only. Actual rates depend on individual circumstances, lender assessment, the asset type, and current market conditions in 2026.

The Challenge of Equipment Finance for New Businesses

Starting a new business in Australia is an exciting venture, but it often comes with significant capital requirements. Acquiring essential equipment – from commercial vehicles and machinery to IT infrastructure and specialised tools – can be a major hurdle. For new businesses, the lack of an established trading history and proven revenue streams can make securing traditional finance challenging. Major banks, for instance, often require a minimum of two years of financial records, leaving many startups and emerging ventures feeling locked out.

However, the landscape for equipment finance for new business is evolving. Specialist lenders and modern comparison platforms are increasingly offering tailored solutions designed to support the growth of Australian startups. Understanding these options and navigating the unique eligibility criteria is crucial for any new business looking to get off the ground with the right tools.

What is Equipment Finance for New Businesses?

Equipment finance refers to a range of loan products specifically designed to help businesses acquire assets without needing to pay the full cost upfront. For new businesses, this means you can get the essential tools you need – whether it’s a new coffee machine for your café, a delivery van for your logistics startup, or construction machinery for your contracting firm – while preserving your working capital.

These finance options are typically secured against the equipment itself, making them less reliant on extensive historical financial data compared to unsecured business loans. This structure is particularly beneficial for new businesses that may not have significant collateral or a long trading history to present to lenders. As detailed in our Asset Finance Australia guide, this type of funding is a cornerstone for business growth.

Common Equipment Finance Options for Startups

Several types of equipment finance are available, each with distinct features, benefits, and tax implications. For new businesses, understanding these structures is key to choosing the right fit:

1. Chattel Mortgage

A chattel mortgage is a popular choice for many Australian businesses, including startups. Under this structure, your business takes immediate ownership of the equipment, while the lender holds a ‘mortgage’ or security over the asset until the loan is repaid.

• Benefits for New Businesses: Immediate ownership means you can claim the full GST input tax credit upfront (if registered for GST) and potentially depreciate the asset from day one. This can offer significant cash flow advantages and tax benefits, subject to individual circumstances and ATO guidelines.
• Suitability: Ideal for businesses that want immediate ownership and to utilise potential tax deductions.

2. Commercial Hire Purchase (CHP)

With a commercial hire purchase, the lender purchases the equipment on your behalf, and you then ‘hire’ it from them over a set period. At the end of the term, once all payments are made, ownership transfers to your business.

• Benefits for New Businesses: Similar to a chattel mortgage, GST on the purchase price can often be claimed upfront. Repayments are fixed, aiding budgeting.
• Suitability: Good for businesses that prefer fixed payments and eventual ownership, with potential tax benefits.

3. Finance Lease

A finance lease allows your business to use the equipment for a fixed term, with the lender retaining ownership. At the end of the lease, you typically have options to purchase the equipment for its residual value, refinance the residual, or return it.

• Benefits for New Businesses: Lower monthly repayments compared to purchase options, as you’re only paying for the use of the asset. Payments are generally tax-deductible as an operating expense.
• Suitability: Useful for businesses wanting to minimise initial cash outlay and keep equipment off the balance sheet (though accounting treatment varies).

Eligibility Criteria for New Business Equipment Loans

While criteria vary significantly between lenders, especially for new businesses, here are the general guidelines most specialist equipment financiers look for:

• Australian Business Number (ABN): You will need an active ABN, typically registered for at least 3-6 months, though some lenders may consider newer ABNs. For more on this, see our ABN loans guide.
• GST Registration: For loans over a certain threshold (often $50,000), lenders may require your business to be registered for GST.
• Director’s Experience: Lenders assess the experience of the business owners or directors. Relevant industry experience can significantly strengthen your application.
• Clean Credit History: While some specialist lenders offer solutions for bad credit, a clean personal credit history for the directors is generally preferred.
• Business Plan: A clear, concise business plan outlining your operations, market, revenue projections, and how the equipment will contribute to profitability can be highly beneficial. This helps lenders assess your potential for success.
• Asset Type: The type of equipment being financed plays a role. Lenders prefer assets that are essential to your business and hold good resale value.
• Deposit/Equity: While 100% finance is possible, a small deposit (5-10%) can often improve your chances of approval and secure more favourable terms for new businesses.

Eligibility criteria may vary by industry, loan amount, and asset type. If you’re unsure, speaking with a specialist broker can clarify your specific situation.

Documentation Requirements for Startup Equipment Finance

One of the key advantages for new businesses is the availability of low-doc (low documentation) options. These options simplify the application process compared to traditional bank loans. While specific requirements vary, typical documentation might include:

• ABN and GST Registration: Proof of active registration.
• Director’s ID: Driver’s license or passport.
• Bank Statements: Typically 3-6 months of business bank statements (or personal statements if the business is very new).
• Asset Details: Supplier invoice or quote for the equipment.
• Accountant’s Letter: Some lenders may request a letter from your accountant confirming the viability of your business.
• Business Plan: As mentioned, a well-structured plan can be a strong supporting document, showcasing your operational strategy.

Comparison platforms like Loan Phone aim to streamline this process, making it easier for new businesses to compile and submit the necessary information efficiently.

Indicative Rates and Terms for New Businesses

Interest rates for equipment finance for new business in Australia are typically higher than for established businesses due to the perceived higher risk. As of 2026, indicative rates for new businesses can range from 9% p.a. (indicative only) for those with some trading history and strong fundamentals, up to 14%+ p.a. (indicative only) for very new ABNs or higher-risk profiles.

• Terms: Loan terms generally range from 1 to 5 years, though some assets may allow for longer terms. Newer businesses might initially be offered shorter terms.
• Balloon Payments: A balloon payment (or residual value) at the end of the loan term can reduce your monthly repayments, but requires a lump sum payment at the end. This can be a useful cash flow management tool for startups, particularly when considering equipment that has a good resale value. For more on this, see our guide on balloon payment equipment finance.

It’s important to remember that these are indicative rates only. Actual rates and terms depend on a comprehensive assessment of your business, the asset, and current market conditions.

The Streamlined Application Process

Securing equipment finance for new business doesn’t have to be a complex, drawn-out process. Modern comparison platforms like Loan Phone have significantly streamlined the application journey:

1. Online Comparison Start by using an online comparison tool. Provide basic details about your business and the equipment you need. This allows you to quickly see personalised options from multiple lenders, simplifying the initial search.

2. Documentation Submission Once you’ve chosen an option, submit the required documentation. For new businesses, this often involves low-doc requirements focusing on bank statements and ABN details, designed to be less burdensome than traditional applications.

3. Credit Assessment Lenders assess your application based on their specific criteria for new businesses. This is where specialist lenders shine, as they are often more flexible and understanding of startup challenges than traditional banks.

4. Approval & Settlement For straightforward applications, initial credit decisions may be provided within 24-48 hours. Once approved, the necessary documents are signed, and funds are disbursed to the equipment supplier, allowing you to acquire your essential assets swiftly and efficiently.

This efficient processing, combined with specialist broker support, means you can get approved on an apples-for-apples basis much quicker than through traditional bank channels. Compare your options now.

Tax Implications of Financing Equipment

Important: Tax benefits depend entirely on your individual business structure, circumstances, and how you use the asset. The information below is general in nature only. Always seek independent advice from a qualified tax professional or accountant before making any financing decisions. For a deeper dive, check our guide on equipment finance tax deductions.

Financing equipment can have several significant tax implications for new Australian businesses:

• GST Input Tax Credits: For chattel mortgages and commercial hire purchases, if you’re registered for GST, you can typically claim the full GST component of the equipment’s purchase price upfront in your first Business Activity Statement (BAS). This can provide a valuable cash flow boost for a new business.
• Depreciation: As the owner of the asset (with chattel mortgages or eventually with CHP), your business can claim depreciation deductions on the equipment over its effective life, as per ATO guidelines. This reduces your taxable income.
• Interest Deductions: The interest portion of your loan repayments is generally tax-deductible as a business expense.
• Instant Asset Write-Off: While the specific rules and thresholds for the Instant Asset Write-Off can change, it has historically allowed eligible businesses to immediately deduct the full cost of eligible assets in the year they are first used or installed. New businesses should consult their accountant to see if they qualify for any current or future iterations of this scheme, such as the Instant Asset Write-Off 2026.

Example: Financing a Delivery Van for a New Catering Business

This example is for illustrative purposes only. Actual rates, terms, and repayments depend on lender assessment, your individual circumstances, and current market conditions. Consult your accountant regarding tax implications.

Frequently Asked Questions

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Last updated: 2026-02-18