How to Finance the Equipment you need for your Business

With interest rates at their lowest ever, it’s a great time to buy a property, it’s also a great time to get the equipment you need for your business, or even to start a new one. You may be keen to use the EOFY sales to save yourself some cash, or you may be interested in updating your business equipment to make the most of any potential tax benefits this year. Talk to Fornaro about our range of equipment financing options that could offer exactly what you need to make the most of your opportunities.

Why use equipment finance in your business?

Many businesses simply do not have enough cash saved to purchase income generating equipment outright. Buying equipment with financing allows it to be paid for over a number of years, rather than in one payment, which makes it much more affordable.

Equipment financing is also a popular alternative to a standard business loan. That’s because the financing may often be arranged with the new equipment as collateral, reducing your overall financial risk. It also allows you to preserve your savings for use in other areas of your business, should the need arise.

Typically, equipment financing allows you to finance 80 to 100 percent of the cost of the equipment you need, so it can potentially assist you to reduce your deposit. Many lenders also offer flexible payment terms to help you maximise your cash flow. There may also be substantial tax benefits so check with your accountant to see how they may apply to you.

What kind of equipment financing options are available?

The type of business you have and the purpose of the equipment you need will often determine what kind of equipment finance is right for you. However, generally speaking, we can assist with these different types of equipment financing options:

Chattel Mortgage

This is a straightforward loan where you own the equipment. The equipment itself is used as the security for the loan. Once the mortgage is paid out or the loan is paid off, the mortgage is removed and the vehicle or equipment is officially yours. Most commercial asset finance is done as a Chattel Mortgage.


  • If you’re registered for GST on a cash basis, you may be able to claim the GST in your vehicle’s price up-front through your next Business Activity Statement (check with your accountant).
  • GST is not payable on your repayments
  • You may be able to claim depreciation and the interest charges on your chattel mortgage as a tax deduction (again, consult your accountant)
  • Lower interest rates generally apply as finance is secured against the asset
  • You may be able to decrease your regular repayments by paying a deposit upfront, trading-in a vehicle, or opting for a balloon payment at the end of your loan term
  • You can manage your business cash flow more effectively

Asset Lease

An asset lease is an option that leaves the lender to retain actual ownership of the equipment. You pay a fixed monthly lease rental for the term of the lease, then you have the option of paying the residual and taking ownership of the equipment, selling the equipment to pay out the residual, or refinancing the residual to continue the lease.


  • You’ll know what your payments are and can manage your cash flow accordingly.
  • You may be able to claim the lease payments as a tax deduction (speak to your accountant).
  • There could be other tax benefits, including potentially making advance lease payments for tax or cash flow purposes (again, it’s best to consult your accountant).
  • You may be entitled to claim a GST credit for the GST included in each lease payment.
  • There’s flexibility to reduce the size of your payments by increasing the residual amount at the end.
  • You can keep your assets up-to-date and some equipment leases can potentially include a service contract

Commercial Hire Purchase

With this option, the lender purchases the equipment and hires it back to you for a set period of time. At the end of the contract term and when it has been completely paid out in full, you take ownership of the equipment.


  • Won’t tie up your cash
  • Generally, doesn’t require additional security
  • Depreciation and interest on any repayments may be tax deductable (seek confirmation from your accountant)
  • You own it at the end of the hire period

Every business is different, and it is important to consider each of these financing options carefully before choosing the one that will best suit your particular business and your objectives. We recommend that you talk about your financing options and their tax implications with your accountant before you come to see us to discuss your needs. Please let us know if you need a referral to a reliable accountant.

What kind of equipment can you buy?

Almost any kind of equipment can be purchased using one of these asset financing options, provided it is being used for legitimate business purposes. Some types of equipment commonly purchased with asset financing are:

  • Computers and IT equipment
  • Trucks, buses and heavy commercial vehicles
  • Company fleet vehicles like cars and delivery vans
  • Earthmoving and excavation equipment
  • Industrial plant equipment like printing presses, factory and production line machinery
  • Agricultural and farming equipment
  • Healthcare, scientific and medical equipment

If the equipment you need is not on this list, that doesn’t mean we can’t arrange financing for it! Tell us about your requirements and we’ll help you find the right deal for your particular circumstances and financial situation. As with mortgages, we can source financing from a wide variety of lenders which helps to ensure that you get the right deal for your purposes at a great rate.

Remember, tax time is a great time to make the most of EOFY sales and tax deductions for your business. If you’re in the market for new business equipment then it pays to talk to Fornaro beforehand. With your financing pre-approved, you’ll have better bargaining power with your suppliers. To find out more about our asset financing services, please contact Fornaro today.