Can a New Business Get Equipment Finance?

Quick answer

Yes, a new business may be able to obtain equipment finance.

The available lenders, deposit requirements and loan terms may differ from those offered to an established business. Lenders may look closely at the owner’s experience, business plan, cash-flow forecasts, contracts, financial position and the equipment being purchased.

Why is finance different for a new business?

An established business can usually provide trading history, financial statements and bank transactions showing how it has performed.

A new business may not have that history yet. The lender therefore needs other information to understand:

• whether the business is likely to generate enough income

• whether the owners understand the industry

• whether the repayments appear manageable

• whether the equipment has suitable resale value

• how much the owners are contributing

A lack of trading history does not always mean finance is unavailable. It means the application may need to be supported differently.

What can strengthen the application?

Relevant industry experience

Experience can demonstrate that the owners understand the work, customers, costs and risks involved.

For example, a qualified earthmoving operator starting a new contracting business may be viewed differently from someone purchasing specialised machinery in an unfamiliar industry.

A clear business plan

A concise plan can explain:

• what the business will do

• who its customers are

• expected income and expenses

• how the equipment will generate revenue

• how repayments will be managed

Cash-flow forecasts

Forecasts help show how money is expected to move through the business.

They should be realistic and supported by clear assumptions rather than optimistic estimates.

Contracts or confirmed work

Signed contracts, purchase orders or evidence of upcoming work may help demonstrate future income.

A deposit or contribution

A deposit may reduce the lender’s risk and show that the owners are financially committed to the purchase.

Not every application requires a deposit, but newer businesses may have fewer no-deposit options.

A suitable asset

The lender may consider the age, condition, value and resale market of the equipment.

An established, readily saleable asset may be easier to finance than highly customised equipment with limited resale demand.

CommBank’s guidance for newer businesses lists documents such as a business plan, cash-flow projection, BAS, interim financial statements and contracts as potentially helpful supporting information.

What documents might I need?

Depending on the lender and application, you may be asked for:

• identification

• ABN or ACN details

• personal income information

• business and personal bank statements

• a business plan

• cash-flow projections

• evidence of contracts

• details of assets and liabilities

• a quote or invoice for the equipment

Lenders commonly request financial statements, bank statements and identification when assessing business finance.

Practical example

A mechanic is opening a new workshop and needs $120,000 of diagnostic and workshop equipment.

Although the company is new, the owner has 15 years of industry experience, a signed lease, available savings, several commercial customers and a detailed forecast.

Those supporting factors help the lender assess the application even without two years of company financial statements.

Common questions

Do I need to have traded for 12 months?

Not with every lender. Some products have minimum trading requirements, while other lenders may assess start-ups using alternative evidence.

Will I need a deposit?

Possibly. It depends on the lender, the strength of the application and the equipment being financed.

Does my personal credit history matter?

It may. For a new business, lenders often consider the directors’ or owners’ financial position and credit history.

Key takeaways

• New businesses can obtain equipment finance.

• Relevant experience and preparation become especially important.

• Contracts, forecasts and a contribution can strengthen an application.

• Requirements vary considerably between lenders.

Starting a new business?

Tattersalls Finance can help you understand which information may be required before you apply for equipment finance.

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