Your Guide to Small Business Equipment Finance (Australia)

As a business finance broker who has helped over 3,300 Australian business owners, I have seen first hand how important the right small business equipment finance (Australia) can be. Whether you have a busy café in Melbourne or a construction company in Brisbane, the right equipment financing can mean the difference between stagnation and growth.

What is Equipment Finance?

An equipment loan allows businesses to acquire the machinery, vehicles or technology they need without the need for a lump sum upfront. Instead costs are spread over time, preserving cash flow and keeping your working capital intact.

Why Equipment Finance is Important for Small Businesses

1. Preserves Cash Flow: Buying equipment outright can drain your cash reserves. Financing equipment allows you to spread the cost, keeping your cash flow for other business operations.

2. Tax Benefits: Some finance options may offer tax benefits. Lease payments for example could be claimed as business expenses for potential tax deduction (typically with fixed interest rates), reducing your taxable income.

3. Stay Competitive: Keeping your equipment up to date means you stay competitive in your market. Equipment finance can help you upgrade without the financial burden.

4. Flexibility: From a short term business loan to long term leases, there are options to suit most businesses that need to buy equipment.

Equipment Finance Options for Small Business

1. Equipment Loans: The equipment is the collateral. You own the equipment from day one and repay the loan over a fixed term.

2. Leasing: Operating leases are short term and don’t transfer ownership at the end, great for equipment that depreciates quickly. Finance leases cover the equipment’s life, with an option to purchase at the end.

3. Chattel Mortgage: A loan against the equipment. You own the equipment upfront and can claim GST credits and depreciation.

4. Hire Purchase: Similar to a chattel mortgage but you only own the equipment after the final payment.

How to Get Equipment Finance Step by Step

If you need to finance equipment for your business, call 1300 262 098 today and talk to our friendly team. We can walk you though the Asset Finance process to save you time, headaches and money. The typical steps involved include:

We Assess Your Needs: What equipment do you need now and in the future? Whether it’s a new coffee machine for your café or an excavator for your construction business, know what you need.

We Help You Get Your Finances in Order: Lenders will review your financials. Make sure your cash flow, profit and loss statements and balance sheets are up to date.

We Research Lenders: Not all lenders are the same. We research equipment finance options from more than 60 Australian lenders, including those that specialise in small business equipment finance in Australia. That way you get to choose from the best equipment lease options.

We Help Prepare Your Application: Once you’ve selected an option, we help you gather detailed business and personal financial information, create your business plan if needed, and equipment quotes.

Review and accept the finance agreement: Be sure to read the terms and conditions carefully. Make sure you understand repayment schedules, interest rates, fees and what happens if you miss a payment.

Avoiding Common Equipment loan traps

Some of the common traps I see business fall into include:

• Overstretching Financially: Make sure you can afford the repayments. Don’t let the new equipment blind you.

• Not Shopping Around: Different lenders offer different terms. Compare options to find the right fit for your business.

• Ignoring the Fine Print: Read all terms and conditions. Hidden fees and bad terms can cost you in the long run.

• Forgetting Depreciation: Consider how equipment depreciation affects your financial strategy.

By working with me we can avoid this potential traps.

A Case Study

The owner of a mid-sized construction company in Brisbane needed to upgrade their fleet of excavators. The upfront cost was too high so they explored equipment finance options. They went for a finance lease, so they could upgrade every 5 years. The lease payments matched their project cash flow and offered tax benefits.

Equipment Finance Trends

According to the 2023 Equipment Finance Industry Survey by the Australian Equipment Finance Association (AEFA) there has been a 15% increase in equipment finance volumes across Australia. This is due to the demand for new and technology driven equipment in sectors like construction, healthcare and agriculture. The survey found that over 60% of small business will use equipment finance in the next 2 years to stay competitive and operationally efficient.

1. Technology Integration: Expect more digital application processes, from digital document submission to AI driven credit assessments.

2. Green Financing: Lenders will offer better terms for green equipment, for businesses investing in green technology.

3. Flexible Finance Options: More tailored options will be available with flexible repayment schedules to suit your business.

4. Increased Competition: More players in the equipment finance market will mean lower costs and better terms for borrowers.

Choosing the Right Finance Broker

1. Experience and Expertise: Look for brokers with a history of small business equipment finance in Australia. Their experience is gold in navigating complex applications and getting the best terms.

2. Transparent Fees: Make sure your broker is upfront about their fees. Hidden fees can eat into the benefits of a good finance deal.

3. Strong Lender Relationships: Brokers with multiple lender relationships can offer competitive deals and know what each lender offers.

4. Tailored Advice: Every business is unique. A good broker will tailor their advice to your business.

5. Good Reviews: Check testimonials and reviews from other business owners. A good reputation is often the best indicator of a broker’s service and reliability.

Small Business Equipment Finance Australia – Getting Started

Small business equipment finance in Australia can be tricky but with the right guidance it can be a powerful tool for growth and profitability. Know your options, avoid the traps and work with a good finance broker and you can get the equipment your business needs to succeed.

Whether you’re looking to expand your fleet, upgrade your technology or invest in new equipment, equipment finance can help you achieve your business goals and keep your finances healthy.

We can help you every step of the way. Just ask!