Asset Finance: The base Figures

Loan TypeSecuritiesTermsAvg Loan SizeEstimated Interest Rate
Asset FinanceAsset1-7 years$100,0001.6%-15%

What is Asset Finance for Business?

An asset finance business loan (or simply business asset finance) is a type of business loan that is essential to many of Australia’s growing industries of today. Typically, with small business asset based lending, the asset you’re looking to purchase is used as security in the lending process. But even if you aren’t financing a new asset, you can still seek an asset finance business loan by using an existing company or personal asset to secure the asset funding.

A huge variety of assets can be financed, just a handful of examples would include:

  • Heavy Machinery
  • Farming Equipment
  • Company Vehicles
  • Mining Equipment
  • IT Equipment
  • Kitchen Fitout (also called a fit-out loan)

Basically, when it comes to asset finance, commercial construction finance or equipment loans, it’s generally only for assets that are seen as a significant investment in your business and will have a reasonable lifespan.

One of the key advantages of business asset finance is it allows businesses to spread the cost of the asset over its expected lifespan. If we take an entrepreneur looking to launch a manufacturing business for example, the upfront costs of the capital machinery could be well above the cash currently held in the bank. This is where business asset finance comes in. Even if a business has the capital to hand, they may not wish to lose such a large chunk by purchasing an asset outright. 

Is Asset Finance the Same as Equipment Finance?

When you hear lenders talk of asset finance and equipment finance, the two terms are often interchangeable and referred to as one and the same. If we were to be specific, the only slight technical difference is that not all business assets would be referred to as equipment. A company car for example would not necessarily be referred to as a piece of equipment. Therefore asset finance broadly consists of:

Prior to an Asset Business Loan – Deciding on Buying vs Leasing

When it comes to buying an asset through an asset business loan (one of the many types of secured business loans), it would be best to consider a popular alternative – leasing the asset, whether it’s a piece of real estate, or otherwise.

The advantages of renting or leasing equipment can include the leasing company being responsible for the maintenance and repair of the asset and having the ability to update business assets more frequently. If you’re in an industry where having the most up-to-date equipment can provide a competitive advantage then a lease may be more suitable than buying an asset outright.

The clear disadvantage of leasing an asset is that you will not own the asset at the end of the agreement, meaning there would be no resale value and to continue using the asset either a new leasing agreement would be required or there could be a buy-out option at the end of the lease.

There are many different factors to weigh in on such a decision but it must be considered and well researched prior to taking an asset business loan in Australia. Expensive assets, that a business is confident it will require for a long time, are generally best purchased through asset finance. Lower value or more temporary assets are generally better suited to being leased. It’s worth noting there are many forms of leasing available covered in our guide to commercial equipment finance.


Asset Finance Business Loan vs Standard Term Business Loan

If your business is looking to acquire a new asset, then it’s generally best to work with a dedicated asset finance specialist. A fixed charge will be taken over the asset by the lender (meaning they have the right to sell the asset if your business fails to keep up with the repayments) but you’ll likely qualify for a better interest rate and a longer repayment period that’s often tied to the lifespan of the asset.

If it’s stock or a temporary asset that your business requires then a standard term business loan may be preferable. When the amount being requested is under $150,000 then this can often be granted on an unsecured basis. If greater than $150,000, security will likely be required but this could be a floating charge in lieu of general business assets or sometimes just a directors guarantee, depending on the loan provider. Borrowing terms will be for a significantly smaller period of time than an asset finance business loan but borrowers will be provided with more flexibility to sell assets without requiring the approval of the lender first.

The advantage to working with a marketplace like Lend is they work with both dedicated business asset finance companies and small business lending specialists who provide multi-purpose business loans. With one single application Lend will match borrowers with the most appropriate lender for their business requirements and business profile.


Best for Asset Finance

These are the top 3 small business asset finance companies:

#1 Finance One

  • From $8,000 to $125,000.
  • Loan term 3 to 7 years.
  • Approval in 48h.
  • Offices in Townsville and Brisbane
  • 2020 Awards winner.
  • Optus Awards 2018 Finalist.
  • Focused on personal touch.
  • Min. requirements – generating income for the past 6 months, minimum 21 years of age, clean credit history.
  • Pending Review on smallbusinessloansaustralia

#2 Grow (

  • Established in 2015, more than 7,000 customers and over $1bn funded.
  • Specifically focused on asset , equipment, invoice and trade finance (whereas most lenders are predominantly focused on unsecured loans).
  • Impressive management team with plenty of industry experience.
  • Specialising on vehicles, equipment, and floorplan finance.
  • Accepts sole-traders.
  • Pending Review on smallbusinessloansaustralia

#3 EarlyPay

  • 4.8 /5 on TrustPilot with 150 positive reviews.
  • ASX traded company.
  • Impressive boards and executives.
  • Specifically focus on asset , equipment, invoice and trade finance (whereas most lenders are predominantly focused on unsecured loans). Also offers foreign exchange payments.
  • Fits both startup stage companies as well as larger corporations.
  • Borrow $20,000 to $1m with equipment loans.
  • Min rates on equipment loans – 7.5%.
  • 24h approval.
  • Assets EarlyPay that finances:
    • Steel Engineering
    • Forestry Machinery
    • Packaging Equipment
    • Cleaning Equipment
    • Pharmaceutical Production
    • Compressors & Generators
    • Arborist & Landscaping
    • Food & Beverage Production
    • Drilling & Boring
    • Metalworking
    • Printing Equipment
    • Pallet Racking
    • Medical & Dentistry Equipment
    • Imaging & Testing Equipment
    • Demountable Modular Offices
    • Above ground Mining Equipment
  • Pending Review on smallbusinessloansaustralia


Australia’s Largest Lenders Offering Multi-Purpose Business Loans

The following specialist SME lenders are also available through the Lend platform, with multi-purpose business loans that can be used to purchase new business assets.

#1 Prospa

  • Funding from $5,000 to $300,000.
  • No Security Required for Equipment Finance under $100,000
  • Finance Farm Equipment
  • Heavy Equipment Finance up to $300,000
  • No Age Restriction on Equipment Purchases
  • Unsecured Business Loans Available
  • Prospa review available here.

#2 Capify

  • Funding: $5,000 to $300,000 Suitable for Small Business Equipment Financing
  • Fewest Documents Required
  • Access a Great Equipment Finance Option Today
  • Industry veteran for 17 years
  • Commercial Equipment Loans
  • 99% Positive Client Reviews
  • Capify review available here

#3 GetCapital

  • Equipment Finance up to $750,000
  • Office Equipment Finance
  • No Restriction on the Age of the Asset
  • IT Equipment Finance
  • Equipment Loans Available for up to 5 years
  • Established Businesses (2 years + in existence)
  • GetCapital review available here


New Business Asset Finance / Startup Business Asset Finance

In certain industries, such as construction and farming, there are likely to be assets which are vital to operating your business – without them you simply wouldn’t be able to function as a business or offer the same level of service as your competitors. Assets can be a vital investment to start your business but it can be hard to find the money to pay for them up front. This is particularly true for startups who may require new business asset finance.

Raising capital as a new business is not easy. On the whole, online lenders understand that and they generally have more favourable lending terms than banks – but being a startup will always present challenges when seeking finance. The most favourable terms a borrower will find for startup business asset finance is to have been operating for at least 6 months. This is the minimum requirement we’ve been able to find, with some online lenders asking for at least 12 months in operation and some banks 3+ years.

By agreeing to a small business asset based loan you will be securing your loan agreement with an existing or new asset that you are purchasing for your business, thus reducing the risk to the lender and in turn improving the chances of your business being approved for financing. For that reason you should be better off seeking startup business asset finance vs a standard unsecured term loan.

Low Doc Asset Finance

Low doc asset finance sees businesses access asset finance without the need to provide extensive financial statements. Either the asset being financed or residential property can be used to secure the loan and remove/reduce the need for company financials to be provided.

Most lenders, even low doc asset finance providers, prefer businesses to have had a registered ABN for a minimum of two years but there are still options for businesses who have been trading for less than this. It might be that the borrower has to provide a 10-20% deposit for the value of the asset and a closer look is taken at the credit history of the business.

As a general rule of thumb (though this will change from lender-to-lender) asset finance companies will be willing to provide low doc asset finance up to $100,000 for company vehicles. For tertiary assets, low doc asset finance is usually available up to $75,000 without property and up to $150,000 for residentially secured low doc asset finance.

Despite financial statements not being required to access low doc asset finance, low doc asset finance providers will still want to ensure borrowers are able to repay the loan. For this reason, rather than borrowers providing financial statements, they are usually required to provide copies of their recent bank statements. Low doc asset finance lenders will be checking things like the average daily closing balance, if there are any negative days and the income into the account.


Small Business Asset Based Lending – The Pros and Cons

Asset finance can play a significant role in allowing small businesses to take the next step forward in their development. There are a heap of benefits to asset finance for business but there are a few points to consider as well: 

  • Provides a solution to make purchases that normal cash flow simply wouldn’t cover.
  • Certain tax benefits possible on key asset purchases.
  • Huge variety of asset financing solutions covering; equipment, car fleets and property.
  • Should attract a lower rate/higher chance of approval than an unsecured business loan.
  • Repayments should be fixed and easy to budget for.
  • Varied terms – asset finance can be a mid to long term capital solution.
  • Can involve a deposit, your business may have to pay for 5-10% of the asset you’re wishing to buy upfront.
  • Assets can become outdated during your repayment period.
  • Can involve asset valuation costs.

Business Asset Finance Calculator

Use our business asset finance calculator for free and better understand the repayments you may face if you take out an asset finance business loan. Simply input the total value of the asset you wish to purchase, the deposit you will pay on your asset purchase, the expected repayment term and the likely interest you will incur.

Equipment Loan Calculator

Capital Raise Through Existing Business Assets

Business owners tend to think of small business asset loans for acquiring new business assets. They may not be aware of raising finance based on existing assets owned by the business. This process, known as sale-bank finance, isn’t just about seeking a secured business loan. Businesses also have the option of selling an unencumbered asset to a financier and leasing the asset back for however long it’s needed.

Sale-back finance works best with high value, slow depreciating assets like yellow goods, farming equipment and trucks. Multiple assets can even be grouped together into a single finance agreement. Businesses are likely aware of secured business loans but not may not be so familiar with a sale and hire-back agreement. Under a secured business loan, the asset remains in ownership by the business and the lender will take a charge over the asset. Through a sale and hireback agreement, the lender owns the asset, thus it would be off the balance sheet of the borrower. Sale-bank finance is multi-purpose so can be used to pay debts, meet ATO obligations or fund business growth.

Concluding Thoughts on Business Asset Funding

There are lots of business asset financing providers in Australia and (by lending standards) it’s a pretty accessible solution for most small businesses. Given the uncertain times, lenders are likely to prefer secured lending solutions over unsecured, so an asset finance business loan could be a great option right now. Try to be sure you’re buying an asset that will stand you in good stead throughout its lifetime and you can afford the repayments throughout this time too. Using our business asset finance calculator should help you budget at this stage.