You have quoted a job that needs a machine you do not own. Maybe it is a wheel loader to keep a yard moving, a compressor for a run of civil work, or a new line of workshop gear that pays for itself if you can get it running by the start of the next quarter. The work is there. The question is how to fund the asset without draining the cash you need to actually do the work.
That is what equipment finance is for, and it is where a broker earns their keep. This guide covers what counts as equipment, the main finance products and how they differ, what lenders weigh when they look at your application, how to match the structure to the asset and your cash flow, and the honest trade-offs between going through a broker and going direct to a lender.
What counts as equipment
Equipment finance covers the income-producing gear a business buys to do its work. That is a broad tent. It runs from earthmoving and construction plant through to agricultural machinery, workshop tools, manufacturing lines, materials handling gear, medical and dental equipment, commercial kitchen fit-outs, and IT hardware.
The common thread is that the asset is used for business and generates revenue. Lenders care about that because the asset is usually part of their security. A machine that earns is a machine that helps you make the repayments and holds resale value if things go wrong.
Assets split roughly into two groups, and it shapes how lenders behave. There is heavy plant and machinery with long working lives and strong used markets, such as excavators and earthmoving gear, where a lender can look at hour meters, service history and auction results to work out what the asset is worth. Then there is faster-moving gear like technology and some fit-out items, which age quickly and hold less value. The first group is easier to fund over a longer term. The second usually gets shorter terms because the security fades fast.
The product family: chattel mortgage, lease and rental
Most equipment gets funded through one of a handful of structures. They differ in who owns the asset, how the repayments are treated, and what happens at the end.
Chattel mortgage. You own the asset from day one and the lender takes a mortgage over it as security. This is the most common structure for businesses buying plant they intend to keep. You carry the asset on your books and the tax treatment follows ownership. The lender releases its security once the loan is paid out.
Finance lease. The lender owns the asset and leases it to you for the term. You use it and make regular payments, and at the end there are options around the residual. This suits businesses that want the use of the gear without owning it outright, or that prefer the way lease payments sit in their accounts.
Rental or operating lease. You pay to use the asset for a period and hand it back at the end, or extend. This suits gear you only need for a defined stretch, or fast-ageing equipment you would rather not own when it is obsolete. You are paying for use, not building ownership.
Each of these has a different tax profile, and the treatment of interest, depreciation and any balloon or residual depends on the structure and on rules that change over time. Do not guess at it. Confirm the current treatment for your situation with a registered tax agent or check the Australian Taxation Office directly, because that is where the real numbers live.
What lenders assess
Equipment finance decisions come down to two questions running in parallel: can this business service the repayments, and how good is the asset as security. A strong deal answers both well. A weaker one leans on one to make up for the other.
On the business side, a lender looks at how long you have traded, the health of your cash flow, whether you have existing finance and how you have handled it, and what work is actually feeding the machine. Contracts, a purchase order, or a pipeline of jobs make an application read as stronger because they show where the repayments come from.
On the asset side, the lender weighs age, condition, hours or kilometres, brand, and how easily the gear could be resold. A late-model machine from a mainstream brand with a deep used market is easy to fund. An older, specialised or privately sourced asset is harder, because if the lender ever has to recover it, the resale is less certain. This is the commercial logic behind almost every condition you will see on an equipment deal.
Matching the structure to asset life and cash flow
The art of a good equipment deal is lining up the term, the deposit and any balloon with how the asset earns and how long it lasts.
The guiding idea is simple: the finance should not outlive the useful life of the asset. Funding a fast-ageing piece of gear over a long term leaves you paying for something worn out or obsolete. A durable machine with years of work in it can carry a longer term comfortably, which keeps each repayment lower and protects cash flow.
Deposits and balloons are the levers that move the repayment. A larger deposit reduces what you borrow and can strengthen a marginal application. A balloon, or residual, at the end of the term lowers the regular repayment but leaves a lump sum to settle later, either by paying it out, refinancing, or selling the asset. That helps cash flow in the near term but costs more overall and needs a plan for the end. If your income is seasonal or tied to project milestones, it is worth discussing repayment timing that matches when money actually comes in.
Think about how each lever trades off. Lower repayments now usually mean more paid over the life of the deal, or a larger sum owing at the end. There is no free option, only the structure that fits your operation best.
Broker versus going direct
You can approach a lender directly, or you can work through a broker who deals with many lenders. Both are legitimate. Which suits you depends on your situation and how much time you want to spend.
Going direct means one lender, one credit policy, one answer. If you have a long banking relationship and a clean, straightforward deal, that can be quick and simple. The limitation is that you only see what that one lender will do, and their appetite for your asset class or your trading history is fixed.
A broker works across a panel of lenders, from major banks to specialist financiers who focus on plant and equipment. Their value is knowing which lender is likely to say yes to your particular combination of asset, structure and circumstances, and presenting your application the way that lender wants to see it. That matters most when your deal is not vanilla: a newer ABN, an older or privately sourced machine, a specialised asset, or a knock-back you have already had. Different heavy equipment lenders have genuinely different appetites, and matching the deal to the right one is most of the job.
Brokers and lenders operate under an Australian credit licensing regime overseen by the national regulator, and whether a given arrangement sits inside it turns on the purpose of the borrowing. For business equipment used to produce income, you are squarely in commercial territory.
Different situations, different questions
Established operators with assets already on the books usually have the strongest hand. Trading history and existing equipment give a lender confidence, and the conversation is often about structure and term rather than whether the deal happens at all.
Newer ABNs with work lined up face more scrutiny because there is less history to read. A signed contract or a firm order helps a lot here, as can a larger deposit or offering an existing asset as extra security.
Owner operators buying a first asset are often funding the thing that lets the business start earning. Lenders look closely at the plan and at how the repayments will be met before the machine is fully productive.
Businesses replacing or upgrading gear are usually in the easiest position of all, because there is a track record with the same kind of asset and often equity in the machine being replaced.
Preparing and the quote process
Have your key material ready before you apply. That typically means identifying the business properly, recent financials or bank statements, details of the asset including a quote or invoice from the supplier, and evidence of the work the asset will do. If you are buying privately or the machine is older, expect the lender to want more detail on condition and value.
An application generally moves faster when the asset is mainstream, the seller is a dealer, and the paperwork is complete. It slows down when the gear is unusual, privately sourced, or when income is hard to read from the documents provided.
Specific asset classes have their own quirks worth understanding, whether that is mining equipment heading to remote sites or construction equipment funded across a project cycle. The principles here hold, but the detail varies.
Common questions
Is one lender's no the final answer?
No. A knock-back from one lender reflects that lender's credit policy and appetite, not a universal verdict on your deal. Another lender with a different view of your asset class or trading history may see it very differently. This is one of the main reasons operators use a broker after a direct decline.
Can I finance a machine I buy privately?
Often yes, though it usually attracts more scrutiny than a dealer purchase. The lender wants comfort on the machine's condition, ownership and value, so expect inspections or valuations on older or private-sale gear.
What to do next
Work out roughly what the asset costs, how long it needs to last, and how the work will feed the repayments. Then get real numbers on your own deal rather than working from generalities. You can request three free quotes at /quote/ and compare how different lenders would structure the same purchase. For tax treatment, speak to a registered tax agent or check the ATO's business pages.