How to fund business equipment or a vehicle

A new excavator, a second van, a commercial oven, a CNC router, a dental chair, a laptop fleet — equipment is how most businesses grow their capacity. The question is how to pay for it without leaving yourself exposed.

There’s no single right answer. There’s a right answer for your equipment, your cash position and your plans. Let’s work through it.

Cash, lease or loan — what’s the difference?

Approach	Tends to suit	Watch out for
Pay cash	Small, low-risk purchases when you have a healthy buffer	Draining the buffer you need for surprises
Lease	Technology that dates quickly; predictable monthly cost	Total cost over time; end-of-lease terms
Equipment-style loan	Long-life assets you’ll use for years	Term longer than the asset’s useful life
Unsecured business loan	Second-hand or unusual equipment, trading businesses	Size relative to your turnover
Property-secured loan	Big purchases or bundling equipment with other needs	Your property is security

business.gov.au has a helpful guide to leasing or buying vehicles and equipment that sets out the trade-offs in more detail.

How do you match the funding to the equipment?

The golden rule: the funding term shouldn’t outlast the equipment’s useful working life. If a machine will realistically last five years, you don’t want to be paying for it in year seven.

Coaching questions to work through:

1. How long will it earn money? Be realistic about wear, technology changes and your plans.
2. How quickly does it pay for itself? More output, less outsourcing, lower repair bills, less downtime.
3. What does it do to your buffer? Our cash runway guide shows how many weeks of costs your cash covers — check it before and after the purchase.
4. Is it new or used? Second-hand can be great value, but lenders may want more detail.
5. What else do you need? If working capital or debt consolidation is also on the list, one facility might cover everything.

What about the instant asset write-off?

For eligible businesses with aggregated turnover under $10 million, the ATO’s $20,000 instant asset write-off lets you claim an immediate deduction for the business portion of an asset costing less than $20,000 in the year it’s first used or installed ready for use. The limit was extended for 1 July 2025 to 30 June 2026 and has been made ongoing from 1 July 2026.

It’s a tax deduction, not a cash rebate — the benefit arrives when your tax return is assessed. Talk to your accountant about how it applies, and don’t buy equipment you don’t need just for the write-off.

Once you know what you’re buying, check your options with a real person — about 60 seconds, no credit check at that first step.

Is this purchase good debt?

Equipment is often the textbook example of good business debt: it produces income that repays the funding. But not always. Ask:

• Will this equipment create or protect income, or is it a nice-to-have?
• Would the business be noticeably worse off without it in 12 months?
• Could you rent or outsource instead while you test demand?

Our good debt vs bad debt guide has a seven-question self-test that works well for equipment decisions.

What do lenders want to see for equipment finance?

• A quote or invoice showing exactly what you’re buying and from whom.
• Bank statements showing the business can carry the repayment.
• Lodgements up to date.
• Condition and age details for second-hand equipment.
• Property details, if you’re offering security for a larger amount or bundling needs.

An illustrative example

Illustrative only. A landscaping business wants a second-hand compact excavator. It currently hires one for about half its jobs, and the hire costs are climbing. The owner has cash available, but using it would leave only three weeks of costs in the bank.

The funding plan suggests keeping the buffer and financing the excavator over a term that fits its remaining working life. An unsecured loan ranks first, because the business trades strongly and the machine is second-hand. The prep checklist: the seller’s invoice, photos and service history, six months of statements and a note on current hire costs.

What should you have ready?

• Quote or invoice for the equipment
• Photo ID and ABN (plus ACN if you trade through a company)
• Last six months of business bank statements
• BAS lodged and up to date
• Age and condition details for second-hand items
• Property details if you’re offering security

New or second-hand: which is smarter to fund?

Second-hand equipment can stretch your budget much further, and for plenty of businesses it’s the smarter call — as long as you know what you’re buying. Before committing:

• Get the service history and, for major plant or vehicles, an independent inspection.
• Check what’s owed on it. Search the Personal Property Securities Register so you don’t inherit someone else’s finance.
• Price in near-term repairs — tyres, belts, a major service — and add them to the amount you fund.
• Think about downtime. Older machines can break down more often, and every idle day costs income.

New equipment usually comes with warranties and predictable running costs, and may suit a longer term. Either way, the question is the same: what will this asset earn or save over the time you’re paying for it?

Ready to upgrade? Let’s find the right way to pay for it

New equipment should make your business stronger, not stretch it thin. We’ll help you choose the approach that keeps your buffer healthy and matches the funding to the asset.

It takes about a minute to enquire and there’s no credit check. We don’t send your details out to a list of lenders — a real person reads your situation and calls you. Please be accurate about the equipment, the price and your monthly deposits so the first option we talk about is the right one.

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