Asset Finance

Asset finance can help you gain the resources you need to grow your business quickly.

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Asset finance is a type of business loan that can help your business grow. It allows you to purchase the equipment that you need to conduct your business. These loans are tailored towards self-employed clients, small business owners and contractors who want the resources to help their business succeed but may not necessarily have the capital to do it at the moment. By taking out asset finance, you can reduce the risk of owning old equipment and remain at the forefront of your industry with the latest technology.

How does an asset finance loan work?

An asset finance loan works the same as any secured loan, but is secured against capital you already have within your business. Some asset loans can be 100% financed, which gives you access to your money as you need. The asset that you've acquired can be given to you in one of two ways: you can either lease it for a set amount of time and pay a rental agreement for use of the asset or you can use the asset and make payments to eventually own it at the end of your lease agreement. The one you decide to go with is dependent on what works best for your business.

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OnDeck Business Loans Offer

Apply online and get quick access to the funds your small business needs with a loan of up to $250,000.

  • Loan Security: Unsecured
  • Interest rate type: Variable
  • Upfront fee: 2.5% origination fee
  • Minimum loan amount: $10,000
  • Maximum loan amount: $250,000
  • Quick application and turnaround
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Compare loans from the lenders below for financing asset

Updated October 20th, 2019
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Apply Now
6 months to 2 years
2.5% origination fee
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
3 months to 1 year
3% origination fee
An unsecured business loan up to $300,000 for eligible businesses. Businesses operating for a minimum of 6 months and having turnover of at least $10,000 a month can apply.
3 to 18 months
2.5% establishment fee
Apply for up to $200,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
3 months to 2 years
3% origination fee
A business loan available up to $300,000 that can be funded in 1 business day. Must have a turnover of $6,000+ per month and provide 6 months of trading history, 3 months history for existing business purchases.
6 months to 2 years
$0 establishment fee
A flexible business loan up to $500,000 with convenient top up and redraw facilities. Business must have been operating for 9 months+ and have monthly sales of $10,000+. Note: The establishment fee will be waived if you apply and are approved before 15 October 2019.
6 months to 2 years
2% drawdown fee
A business loan up to $100,000 for unsecured loans, or $500,000 for secured loans that you can use for any business purpose. Transparent costs and redraw facility available.
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
6 months to 3 years
$0 application fee
A loan of up to $500,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales.

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Loan types available with asset finance

There are a few different types of asset finance and each one can help your business in different ways.

  • Finance lease. This is a contract that allows you to rent a selected piece of equipment for an agreed time frame. You make rental payments to your lender and you bear the risk of disposal at the end of the lease.
  • Hire purchase. A hire purchase loan involves you hiring and using the asset until the last payment where the title of the asset transfers to you.
  • Chattel mortgage. A Chattel mortgage is where you own the asset from the beginning and your loan agreement is secured by the asset you own.
  • Novated lease. This is a type of lease where you can include a vehicle in your salary package, the lender owns the asset and you and your employer sign an agreement to share the responsibilities for the loan.

As you can see, there are a variety of leases to choose from when it comes to getting the latest equipment and vehicles for your growing business. However, it's important to figure out which one will meet your needs as well as figure out what costs will be involved and how your business will be able to handle them.

How to compare your asset finance options

  • Repayment schedule. Discover if the repayments that are set out in the asset finance loan are flexible and are able to meet the ebbing and flowing cash flow of your business or if you'd be better suited to a strict repayment schedule to keep you on track.
  • Varied minimum and maximum loan amounts. With a minimum of $20,000 for some asset finance loans, it's important to figure out just how much debt your business can handle.
  • Lease or own your new equipment. Some lenders provide the option to lease or own your new equipment, which is handy to look out for as it might be better for your business to lease new equipment instead of owning it outright.
  • Variable rates. Variable rates are something to look out for before applying for this loan, as some rates are based on market-related rates whereas others have a set rate that you know before applying.
  • Fees. Application fees for this loan are dependant on whichever lender you go with.

Is there anything you should avoid when taking out asset finance?

There are some things to avoid while considering this business loan type, such as:

  • Risk. If you are unable to make your payments on the type of loan you get, you're putting your personal and business finances at risk as well as the financial wellbeing of any employees that you might have.
  • Falling into a habit. It can quickly become a habit to apply for an asset loan, especially if you need new equipment fast, but it's important to have an endpoint where you decide enough is enough. Once you get new equipment, you'll start to realise other things that are outdated but ensure that you are in control and only take on what your business can afford to handle.

Have more questions?

Are there tax advantages to this loan?

Yes there are, but this is dependant on some circumstances. As long as you can provide evidence that the equipment is used to generate assessable income, your loan may be tax deductible.

Do I have to get a vehicle with this loan type?

Getting a vehicle is common with this type of loan as many businesses need to be mobile. However, as long as you get equipment that will help your business, such as new furniture or technology, you do not need to get a vehicle.

How long do I need this loan for?

The minimum loan term for this type of loan is a year and the maximum is 7, although you can tailor the loan terms to meet your personal and business circumstances.
Picture: Shutterstock

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