Quick answer
Equipment finance is a loan or lease used to buy business equipment such as machinery, workshop tools, hospitality gear or technology, with the equipment normally acting as security. Ownright Custom Finance arranges equipment finance Australia-wide, comparing loans and leases to suit your cash flow.
Key points
- New and used business equipment
- Loan, lease and hire purchase options exist
- Equipment is usually the security
- Tax treatment depends on the structure and your business
- Suits
- Sole traders, small businesses and growing operators
- Security
- The equipment being financed
- Pricing
- Set on your individual circumstances
- Australia-wide
- Yes
What is equipment finance?
Equipment finance spreads the cost of business equipment over time instead of requiring the full price up front. The lender pays the supplier, you repay over an agreed term, and the equipment usually serves as security. That keeps working capital free for wages, stock and everything else the business needs to keep ticking.
It can fund almost anything that helps the business earn: a coffee machine, a panel-beating booth, a physio table, a laser cutter, a pallet racking system, a point-of-sale setup.
Ownright Custom Finance arranges equipment finance Australia-wide. Our director, Trevor Scott, has more than 40 years in finance and leads a team that enjoys finding workable structures for businesses that do not tick every standard box.
Who suits equipment finance?
- Sole traders and small businesses upgrading ageing equipment
- New operators who need gear to start trading
- Growing businesses adding capacity without draining cash
- Owners who would rather keep savings for working capital
- Businesses replacing equipment after a breakdown, where timing matters
Heavy plant has its own page: see excavator and heavy machinery finance. On the land, farm equipment finance covers rural needs.
What do lenders look at?
- Business history: how long you have traded and under what structure
- Financials: tax returns, BAS, bank statements, profit and loss
- The equipment: what it is, its age, who supplies it and whether it can be resold
- Credit profile: personal and business, including any defaults
- Deposit: whether you are putting money into the purchase
- Industry: some sectors are treated as lower risk than others
Loan, lease or hire purchase?
| Option | Who owns the equipment | Points people weigh up |
|---|---|---|
| Chattel mortgage | You, from the start | Ownership, depreciation and GST arrangements |
| Finance lease | The financier | Lower upfront outlay, residual at the end |
| Operating lease | The financier | Use without long-term ownership, often for tech |
| Hire purchase | The financier until the last payment | Defined path to ownership |
Read our guide to the chattel mortgage for more depth. Because tax rules depend on your circumstances, it is worth running the options past your accountant.
What about the instant asset write-off?
The ATO describes the instant asset write-off as a way for eligible small businesses to deduct the cost of an asset in the year it is first used or installed ready for use. At the time of writing, the ATO lists a $20,000 threshold for assets first used on or after 1 July 2023, for businesses using simplified depreciation rules with aggregated turnover under $10 million. Only the business-use portion can be claimed, and rules or thresholds can change. Your accountant or the ATO can confirm what applies to you.
How does Ownright approach equipment finance?
We treat the equipment as part of the story. A forklift for a busy warehouse, an oven for a bakery with a queue out the door, a scanner for a clinic with a waitlist: lenders respond to a clear case for how the asset earns.
From there we match the application to lenders who understand the industry. That might include lenders outside the usual lineup for situations such as a recent business start, a credit blip, or equipment that is a little unusual. Approval cannot be promised, but good matching tends to beat random applications.
Apply online or call the Knoxfield head office on 03 7043 7233.
An illustrative example
Illustrative only: a café owner wants to replace a failing espresso machine and add a second grinder. Her business is under two years old and her first tax return shows low profit because of fit-out costs. The supplier offers finance through a third party, but the structure is not clear.
Ownright would review the supplier’s offer, request quotes for comparison, and approach lenders who look at current takings and bank statements as well as the tax return. A deposit could help, and the term would be matched to the useful life of the machine.
Mistakes to avoid
- Choosing finance purely on repayment size without checking the end-of-term position
- Taking supplier finance without comparing alternatives
- Financing equipment that loses value faster than the loan reduces
- Forgetting to ask about early payout terms
- Buying second-hand without a PPSR search
- Assuming tax benefits without checking with an accountant
Documents to have ready
- Photo ID and business details
- Recent tax returns, BAS or bank statements
- A supplier quote or invoice with full equipment details
- Details of any existing finance
- Evidence of deposit or trade-in
- Information on contracts or revenue the equipment will support
Where to next
If the business needs working capital as well, look at small business loans. If your assets include vehicles, truck finance and tradie ute finance cover those.
How do you choose the right term for equipment?
A good rule of thumb is to match the loan term to the useful life of the equipment, so you are not still paying for something that has stopped earning. A commercial oven that will serve for ten years can sensibly be financed over a longer term than a laptop that will be obsolete in three. Lenders often apply the same logic, setting maximum terms by equipment type and age.
Shorter terms mean higher repayments but less total interest. Longer terms ease cash flow but cost more overall. The right balance depends on how quickly the equipment starts generating revenue, and Ownright is happy to run through the trade-off with you.
What is a residual or balloon on equipment finance?
Many equipment leases and loans allow a residual, also called a balloon, which is a lump sum left owing at the end of the term. This lowers regular repayments, but the lump sum must be paid, refinanced or settled by returning or selling the equipment, depending on the contract.
Residuals suit equipment with reliable resale value, such as vehicles and certain machines. They are less suited to items that lose value quickly. Whatever the structure, it helps to have a plan for the end of the term from day one.
Can you finance several items in one facility?
Often, yes. A business fitting out a new workshop, clinic or kitchen may need many items from different suppliers. Some lenders offer a facility that covers multiple purchases, while others finance each item separately. A single facility can be more convenient, while separate loans offer flexibility if you later sell or upgrade one item.
Software, installation costs and delivery are sometimes financeable if they are part of the invoice. Lenders differ, so mention them early.
Which industries use equipment finance most?
- Hospitality: coffee machines, commercial kitchens, refrigeration and fit-out equipment
- Health and beauty: clinic chairs, laser devices, scanners and treatment tables
- Construction and trades: tools, scaffolding, compressors and generators
- Manufacturing and printing: CNC machines, presses and packaging lines
- Warehousing and retail: forklifts, racking, point-of-sale systems and shopfit
- Agriculture: attachments and specialist gear, covered further on our farm equipment finance page
Each industry has its own lender preferences, and some equipment is easier to finance than others. Specialist or custom-built items may need a lender that understands the market, which is where broker knowledge helps.
Why compare supplier finance with an independent option?
Suppliers frequently offer finance at the point of sale, and for some buyers it is convenient and competitive. The risk is that convenience stands in for comparison. A second quote from an independent broker gives you something to weigh against the supplier’s offer, and sometimes the supplier will adjust. Either way, you go into the decision with more information.
Get equipment finance sorted
The right equipment at the right time can change a business. Start an application and Ownright will work with you to find a structure that fits your cash flow.
How it works, step by step
- 1
Step 1
Tell us what equipment you need, whether it is new or used, and who is selling it.
- 2
Step 2
We look at your business income, ABN history and credit to see which structures are realistic.
- 3
Step 3
We approach lenders comfortable with your industry and the type of equipment.
- 4
Step 4
We coordinate documents, supplier invoices and settlement so the equipment can start earning.
Frequently asked questions
What can be financed as business equipment?
Common examples include workshop tools, commercial kitchen equipment, medical and dental gear, printing machines, forklifts, CNC machines, agricultural attachments and technology. Lenders usually prefer assets that hold value and can be identified, though some accept more specialised items.
What is the difference between a chattel mortgage and an equipment lease?
With a chattel mortgage you own the equipment from the start and the lender takes security over it. With a lease the financier owns it and you pay for its use. The tax and balance-sheet treatment can differ, so talk to your accountant.
Can I finance used equipment?
Yes, many lenders finance used equipment, although age and condition can influence terms. If you are buying privately, a PPSR search can show whether the equipment is recorded as free of other security interests.
Does the instant asset write-off apply to equipment?
It can for eligible small businesses. The ATO lists a $20,000 threshold for assets first used from 1 July 2023 for businesses with aggregated turnover under $10 million, with conditions. Thresholds and dates can change, so check the ATO or your accountant for the current year.
Can a new business get equipment finance?
It can be possible, particularly where the equipment is quality, a deposit is offered or the owner has relevant industry experience. Lenders vary in how long they want to see the business trading, so a conversation helps.
Do I need an ABN?
Business equipment finance generally requires some form of business entity or sole trader registration, but lenders differ on trading history. If you are unsure where you stand, ask us before you apply.