The easiest way to fund business equipment

Asset finance lets you acquire equipment for your business while spreading the cost over time instead of paying the full amount upfront.

Ellenbrook's business community includes trade contractors, medical practices along Main Street, hospitality venues in The Woodlake Village precinct, and operators running machinery across the wider Swan Valley region. Whether you're buying a delivery van, commercial kitchen equipment, or an excavator, asset finance gives you access to what you need without tying up capital that could be used elsewhere in your business.

How Asset Finance Works for Business Equipment

You choose the equipment, the lender purchases it, and you repay the cost plus interest over an agreed term while using the asset to generate income. The equipment itself serves as security for the loan, which means lenders typically offer more accessible approval terms than unsecured business funding. Most arrangements run between two and seven years depending on the expected lifespan of what you're buying.

Consider a landscaping business in Ellenbrook purchasing a new tractor valued at $85,000. Through a chattel mortgage, the business borrows the full amount, claims the GST input credit upfront, and makes fixed monthly repayments over five years. The business owns the equipment from day one, claims depreciation each year, and deducts the interest portion of each repayment. At the end of the term, the tractor is fully paid off with no further obligations.

Chattel Mortgage vs Lease Arrangements

A chattel mortgage means you own the asset from the start and the lender holds a charge over it until you've repaid the loan. You claim depreciation, pay GST upfront (and claim it back if registered), and make regular repayments that include both principal and interest. This structure suits businesses that want ownership and maximum tax deductions.

A finance lease means the lender owns the equipment during the lease period and you make regular payments to use it. At the end of the term, you can purchase the asset for a residual amount, refinance that residual, or return the equipment. Lease payments are typically fully deductible as an operating expense, and you don't pay GST upfront. This option works well if you prefer to upgrade equipment regularly or want to keep the asset off your balance sheet.

Fixed Repayments and Balloon Payments

Most equipment finance agreements offer fixed monthly repayments, which makes budgeting predictable across the life of the agreement. You know exactly what you'll pay each month regardless of rate movements, which helps with cash flow planning.

A balloon payment is a lump sum due at the end of the term, typically between 10% and 40% of the original loan amount. It reduces your monthly repayments during the agreement but requires you to either pay the balloon in full, refinance it, or sell the asset and settle the balance. Businesses often use a balloon structure when they expect strong cash flow later or plan to trade in the equipment before the term ends.

Tax Benefits and Depreciation

Under a chattel mortgage, you can claim depreciation on the equipment each year as it loses value, plus deduct the interest component of each repayment. If you're GST registered, you claim the GST paid on the purchase as an input credit in your next Business Activity Statement.

With a finance lease, the full lease payment is usually deductible as a business expense. You don't own the asset during the lease, so you don't claim depreciation, but the simplicity of deducting the entire payment appeals to many businesses. The GST component is included in each lease payment and claimed progressively rather than upfront.

Your accountant can model both options against your business structure and tax position to show which delivers the better outcome. The answer depends on your turnover, profit margin, and whether you want to keep the asset long term.

Funding Vehicles, Machinery, and Office Equipment

Commercial vehicle finance covers utes, vans, trucks, and trailers used for business purposes. Construction equipment finance applies to excavators, loaders, cranes, and other heavy machinery. Medical equipment finance is used by practitioners acquiring diagnostic tools, dental chairs, or imaging systems. Hospitality equipment finance covers commercial ovens, refrigeration, and fit-outs. Technology equipment finance funds servers, point-of-sale systems, and IT infrastructure.

The structure stays consistent across categories, but the term and residual value will vary. A truck might be financed over five years with a 25% balloon, while office computers might be funded over three years with no residual. Lenders assess the equipment's expected working life and resale value when setting these parameters.

Vendor and Dealer Finance

Some equipment suppliers offer in-house finance arranged through a preferred lender. This can speed up the approval process and sometimes includes promotional rates or deferred payment periods. Dealer finance works the same way when buying vehicles through a dealership.

While vendor and dealer finance can be convenient, the rates and terms aren't always the most competitive. A mortgage broker can compare what the supplier is offering against other lenders in the market and show you the difference in total cost. In many cases, arranging your own finance gives you better pricing and more flexibility, plus it separates the purchase negotiation from the funding decision.

Preserving Working Capital for Business Growth

Paying cash for equipment drains your available funds and limits what you can do if an opportunity or an unexpected cost appears. Spreading the cost over time through structured repayments lets you keep capital available for stock, wages, marketing, or expansion.

Consider a café in The Woodlake Village replacing a commercial coffee machine and refrigeration unit for a combined cost of $40,000. Paying that amount upfront leaves the business with reduced cash reserves during a period when foot traffic can fluctuate. Financing the equipment over four years means the monthly repayment is covered by the revenue those assets generate, and the business retains the buffer it needs to manage quieter trading periods without stress.

Loan Amount, Term, and Approval Requirements

Lenders typically finance between $5,000 and several million dollars depending on the asset type and the business's financial position. Most require at least six months of trading history, recent financials or tax returns, and details of the equipment being purchased. If the business is newer or the loan amount is significant, a director's guarantee or additional security might be required.

Approval timeframes range from 24 hours for smaller transactions with established businesses to a week or more for larger equipment purchases or complex structures. Having your financial records ready and a clear quote for the equipment speeds up the process. A broker can pre-qualify your application and guide you on what documentation to prepare before you commit to a specific purchase.

Frequently Asked Questions