Equipment finance when your business has been knocked back

Why equipment finance can say yes when others don’t

General business loans are assessed on your business as a whole. Equipment finance has an extra layer of comfort for the lender: the asset. If repayments stop, the lender can recover and sell the equipment. That lowers the lender’s risk, which can make it more flexible about your history, your trading time or a past credit listing.

It’s not unlimited flexibility. Lenders still check your credit, your bank statements and your ability to repay. But the asset carries part of the weight.

Common structures

Structure	Who owns the asset	Typical use
Chattel mortgage	You, from the start	Vehicles, machinery, most business equipment
Finance lease	The financier, leased to you	Assets you may upgrade regularly
Hire purchase	Financier until final payment	Less common now, still used
Rental or operating lease	Financier; you rent it	Technology, short-life assets

The right structure depends on how you want to own the asset and its tax treatment. Talk to your accountant.

What makes an asset easy or hard to finance

Easier:

• Cars, utes, vans and light trucks.
• Mainstream earthmoving and construction machinery.
• Common commercial kitchen, medical and workshop equipment.
• Purchases from established dealers.

Harder:

• Older assets near the end of their working life.
• Highly specialised or custom-built equipment.
• Private sales without clear ownership.
• Assets that are difficult to move or recover, such as installed fit-outs.

If a financier has already declined your purchase, our page on equipment finance declines covers what to change.

Strengthening an application after a decline

1. Offer a deposit or trade-in. It reduces the lender’s exposure.
2. Choose a mainstream asset where you can.
3. Buy from a dealer, or get a PPSR search and inspection for a private sale.
4. Keep the term sensible, inside the asset’s useful life.
5. Explain any credit issues briefly and factually.
6. Show the asset will earn, for example a contract that needs it.

Need equipment but been knocked back? Tell us what you’re buying.

When to fund equipment another way

If the asset is unusual, old or bought privately, or you’re buying many smaller items, it may be simpler to fund the purchase with a property-secured loan. A private second mortgage can provide the cash to buy outright, with the equipment unencumbered. For newer businesses, our page on new business funding compares the options.

Check the PPSR before you buy

Before buying any second-hand business asset privately, search the Personal Property Securities Register. It shows whether someone else has a registered security interest over it. Buying an asset with existing finance attached can cause serious problems, and lenders will check this anyway.

Illustrative example: A two-year-old catering business with a paid default on the owner’s file was declined for a general business loan. An equipment financier approved a chattel mortgage for a refrigerated van from a dealer, with a modest deposit, assessing the asset, the business’s clean recent statements and a signed catering contract.

Questions to ask before you sign an equipment finance contract

Equipment finance contracts can look similar on the surface but differ in ways that matter. Before signing, ask:

• What is the total amount payable, in dollars, over the full term?
• Is there a balloon or residual payment at the end? A balloon lowers regular repayments but leaves a lump sum to pay, refinance or sell the asset to cover.
• What happens if I want to pay it out early? Some contracts charge early termination fees.
• What insurance must I hold? Most financiers require comprehensive cover with their interest noted.
• Who is responsible for registration, servicing and repairs? Usually you, but check.
• What happens if the asset is damaged or written off?
• Is a personal guarantee required? For companies and trusts, almost always.

Balloon payments after a decline

Balloons can make a purchase affordable month to month, which is helpful when your cash flow is tight. But they push part of the cost to the end of the term. If you were declined recently, think carefully about whether you’ll be in a position to pay or refinance the balloon when it falls due.

Balloon size	Effect on regular repayments	Risk at the end
None	Higher	None
Moderate	Lower	Manageable if planned
Large	Much lower	Significant lump sum to fund

A moderate balloon matched to the asset’s likely resale value at the end of the term is often a sensible middle path. Ask your accountant how each option affects your tax position too.

Quick checklist before applying

• Choose the asset and get a dealer quote or tax invoice.
• Decide on a deposit or trade-in amount.
• Ask your accountant which structure suits your tax position.
• Check insurance requirements and costs.
• Have recent bank statements, BAS and ID ready.
• Prepare a short explanation of any past credit issues.
• Confirm the term sits comfortably inside the asset’s working life.

Let’s get the asset that earns the money

The right equipment can pay for itself. There’s no credit check when you send us an enquiry, and we don’t pass your details along to several financiers. A real person reads your situation and calls you. Please include the asset, the seller and your planned deposit, so we can match the purchase with the right financier. See if you qualify.