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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. Generally speaking, there are two main forms of asset finance:

  1. Finance to purchase additional assets. Also referred to as equipment finance, this form of asset finance gives you access to new tools, equipment or technology for your business.
  2. Finance secured against your existing assets. This type of finance allows you to unlock capital that's tied up in your existing valuable assets. This could help your business with buying new assets or assist with cash flow or other business-related costs.

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. Find out more in the guide below.

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. While you have effective ownership of the equipment during the lease term, the asset is officially the property of the lender. A possible appeal of leasing as opposed to purchasing an asset may be the potential tax benefits for the borrower.

  • Operating lease

    An operating lease, or a "fleet operating lease", is basically a form of rental agreement. Unlike a finance lease, the lender who owns the asset usually has responsibility for the maintenance of the asset.

  • Technology rentals

    You don't need to rent a vehicle when it comes to asset finance. Technology rentals work in the same way as an operating lease, but for things like computers. Depending on the nature of your business and the number of employees your business has, buying the necessary technology equipment can go from difficult to impossible. Renting your tech may be a much more financially viable option.

  • Hire purchase

    A hire purchase loan involves you hiring and using an asset until the last payment where the title of the asset transfers to you. Unlikely finance leasing, hire purchase agreements mean effectively paying instalments towards an asset for later ownership. Hire purchase agreements may require an upfront payment of a percentage of the asset's total value.

  • Novated lease

    This is a type of lease where you can include a vehicle in the salary package of a business employee. The lender owns the asset and the employer and employee sign an agreement to share the responsibilities for the loan. The lease is paid out of the employee's salary via a combination of pre-tax and post-tax deductions.

  • Chattel mortgage

    A chattel mortgage is like a secured car loan, but specifically for vehicles that are used for business purposes at least 50% of the time. It's a type of asset finance where you own an asset from the beginning and your loan agreement is secured by the asset you own. Chattel mortgages are usually more flexible than consumer car loans, and you can often vary the terms by opting to pay a higher deposit or higher final payment.

  • Secured business loan

    A secured business loan, unlike the previously mentioned forms of finance, doesn't need to be used to acquire access to an asset. It does, however, require an asset that you already own as collateral on the loan. Loans secured by an asset can give businesses quick access to capital that they need. They can be particularly useful for business owners who may be struggling with a poor credit record and find it difficult to qualify for unsecured business finance.

As you can see, there are a variety of finance options and leases to choose from when it comes to getting the latest equipment, vehicles or cash flow 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.

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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 ebb and flow of your business's cash flow. Also consider whether 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. Be warned that opting for too much finance will mean paying more in interest and fees than you need to, but opting for too little will leave you unable to fulfil business finance demands.

  • 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. You may prefer to own the equipment outright eventually as this leaves room for resale or leasing it yourself later down the line. However, there may be cash flow and tax benefits to leasing the equipment instead of purchasing it.

  • Rates

    Rates are something to look out for before applying for asset finance as some rates are based on market-related rates (variable) whereas others have a set rate laid out from the start (fixed).

  • Fees

    Application fees, monthly fees and other ongoing costs will be dependent on which loan and lender you opt for. Make sure to assess the fees associated with a loan as well as the interest rate. Lower interest rates do not always equal cheaper loans when you take the fees into consideration.

Prospa Business Loan

Prospa Business Loan

  • Loans up to $300,000
  • Same-day turnaround
  • Repay early without penalty
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100% confidential application

Prospa Business Loan

Get access to a small business loan from $5,000 - $300,000.

  • Loan Security: No asset security required to access funds up to $100,000
  • Interest rate: from 9.9% p.a. to 26.5% p.a.
  • Comparison rate: from 11.75% p.a. to 33.5% p.a.
  • Establishment fee: 3% origination fee
  • Minimum loan amount: $5,000
  • Maximum loan amount: $300,000
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Compare loans from the lenders below for financing asset

Data indicated here is updated regularly
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Prospa Business Loan
$5,000
$300,000
3 months to 3 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $6,000 is necessary.
Max Funding Unsecured Business Loan
$2,000
$300,000
1 month to 1 year
$0 application fee
An unsecured business loan from $2,000 that offers convenient pre-approval and no early repayment fees.
OnDeck Business Loans
$10,000
$250,000
6 months to 2 years
3% of loan amount
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.
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Instant asset tax write-off

There are a number of potential tax benefits when it comes to purchasing or leasing new assets or equipment. These benefits will vary depending on the type of finance that you are looking to take out, but the $30K instant asset tax write-off is one to take note of.

The instant asset tax write-off allows you to write off business purchases under $30K in your 2019 tax return. For more information, see our guide or visit the ATO website.

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

There are some things to avoid while considering this business loan form, such as the following:

  • 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. Because asset finance is secured (either against the asset that you are accessing/purchasing or against an asset that you already own), you also risk losing that asset if you fail to meet your repayments.

Need to manage cash flow?

If your business needs help with managing cash flow, invoice financing may be an option for you. It's a type of business loan secured by your outstanding invoices.

Compare the invoice financing products below.

Data indicated here is updated regularly
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Waddle Invoice Finance
$10,000
$1,000,000
From 1 month
$0
Apply to borrow up to $1 million against your unpaid invoices and receive your approved funds within 48 hours. Note: Only available to incorporated companies.
Timelio Invoice Finance
$10,000
$100,000,000
Up to 4 months
$0
Get up to 100% of the value of your invoices without having to wait for customer payments, and with no minimum turnover or operating history required.
Scottish Pacific Invoice Finance
$200,000
$100,000,000
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $200,000 in invoices.
BCashflow Positive Invoice Finance
$100,000
$3,000,000
From 1 year
$0
Get funded up to 90% of the invoice in 4 hours. No hidden fees, 1.8% of the invoice for the first 30 days, and 0.06% per day after. Note: Suitable for businesses with monthly turnover between $100,000 and $3,000,000.
Scottish Pacific Selective Invoice Finance
$10,000
$1,000,000
1 to 3 months
$500
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.
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Have more questions?

Are there tax advantages to this loan?

Yes, there are, but this is dependent 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 seven years, although you can tailor the loan terms to meet your personal and business circumstances.
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