Every tradie hits the point where the gear holds the business back. The ute’s done too many kilometres, the mini excavator you hire every week would pay for itself, or a big job needs a second set of tools and a trailer. The question is how to pay for it: specific equipment finance, or a general business loan that gives you cash.
Key takeaways
- Equipment finance is secured against the item you’re buying. It works best for new or near new gear bought from a dealer.
- A business loan gives you cash to spend how you need. It works for auctions, private sales, used gear and buying several things at once.
- Business loans can be unsecured (6+ months trading) or secured against property you already own.
- Speed can decide the deal: some unsecured loans fund within hours, and property secured loans can fund in as little as 24 hours in some cases.
- Talk to your accountant about the tax side before you buy.
How does equipment finance work?
With equipment finance, the lender pays for a specific asset and holds it as security until the loan is paid off. The asset has to be identifiable, usually with a serial number or VIN, and the lender wants to know what it’s worth. That’s why it tends to suit:
- new utes, trucks and trailers from a dealer
- new or late model plant with a clear market value
- a single, straightforward purchase
It can be slower when the gear is older, the seller is a private person, or you’re buying at auction where you need to pay within a day or two. It also doesn’t help if you need money for anything other than that one item.
How does a business loan work for buying equipment?
A business loan puts cash in your account. The lender assesses your business or the property offered as security, not the machine. Once it’s funded, you can:
- bid at auction knowing you can settle on time
- buy from a private seller who wants the money today
- pick up used gear that an asset lender won’t touch
- buy several items together, like a ute, a tipper trailer and a laser level
- keep some money back for fuel, insurance and the first few weeks of wages on the new work
See our page on equipment finance for tradies for how we fund tools, plant, machinery and utes through a fast business loan.
Equipment finance vs business loan: comparison table
| Equipment finance | Fast business loan | |
|---|---|---|
| Security | The asset you’re buying | Unsecured, or existing property |
| Best for | New or near new gear from a dealer | Used, auction, private sale or mixed purchases |
| What the money can be used for | That one asset | Any business purpose |
| Speed | Depends on the asset and seller | Some unsecured loans fund within hours; property secured as little as 24 hours in some cases |
| Paperwork | Invoice, asset details, business financials | Bank statements (unsecured) or no financials (property secured) |
| Flexibility | Tied to the asset | Buy anything, split across needs |
When is a business loan the smarter choice?
Here are the situations where cash beats asset finance nearly every time.
- Auctions. Machinery auctions usually want payment within a short window. If your finance isn’t approved in time, you lose the deal and possibly your deposit.
- Private sales. A private seller doesn’t want to wait for a lender to inspect the machine. Cash in hand gets a better price.
- Older equipment. A ten year old excavator can be a great buy, but many asset lenders won’t finance gear past a certain age.
- Bundled purchases. Buying a skid steer, attachments and a float in one go is simpler with one loan.
- Equipment plus working capital. A new machine often means more jobs, which means more wages and materials before the first invoice is paid.
Example: A small earthmoving operator in Toowoomba spots a well maintained second hand excavator at a clearing sale, with payment due within 48 hours. There’s no time for an asset lender to value the machine. She has equity in a rental property, so a fast second mortgage can have the money ready in time, with enough left over for a trailer and the first month of fuel.
When does equipment finance still make sense?
Equipment finance is a solid option when you’re buying a brand new ute or machine from a dealer, you’re not in a rush, and you want repayments spread over several years to match the life of the asset. If that’s you, it’s worth comparing. Many tradies use both: equipment finance for the new work ute, and a fast business loan for the used plant and extras that need to be bought on the spot.
What if I don’t own property?
You can still borrow for equipment. An unsecured cash flow loan for tradies is available if you’ve traded for 6+ months with an ABN. It’s sized to your turnover, and the lender looks at recent business bank statements to see what comes in and goes out. Some are approved and funded within hours, which is handy for a same week purchase.
For the fastest turnarounds, read about same day business loans for tradies.
Checklist before you buy equipment with a loan
- Get a clear price, including GST, delivery and any attachments
- Check the machine’s hours, service history and PPSR status so you’re not buying someone else’s debt
- Line up insurance before you take delivery
- Work out how the gear pays for itself: new jobs, fewer hire bills, faster turnaround
- Decide how you’ll repay the loan, especially if it’s short term (typically 1 to 12 months for property secured loans)
- Ask your accountant how depreciation applies to the purchase
What does it cost?
Every loan is priced on your circumstances, including the security, loan size, term and your plan to repay. We find the sharpest rate available for your situation and show you the full cost before you sign. When comparing, count the cost of hiring the gear every week, or the jobs you’d turn down without it.
Key facts
- Loan size: $20,000 to $5 million
- Security: unsecured for businesses trading 6+ months, or secured against property you or a guarantor already own
- Speed: some unsecured loans fund within hours; property secured loans in as little as 24 hours in some cases
- Term: property secured loans typically 1 to 12 months
- Purpose: business purposes, including utes, plant, tools, machinery and working capital
How do I get started?
Tell us what you want to buy, roughly what it costs and when you need the money. It takes about 60 seconds to start your application, it won’t affect your credit score and there’s no cost to enquire. A lending specialist will call you back and we’ll tell you quickly if we can help.
