This product looks simple and is not.
Lenders assess the same loan differently. The same application, for the same excavator, from the same business, submitted to two different lenders, can produce an approval at 7.8% and a decline. Not because the business is a different business. Because the two lenders have different credit appetites, different security requirements, and different policies for the construction-adjacent industry the business operates in.
Understanding this is the foundation of good lender selection.
Why Lender Selection Matters More Than Most Business Owners Realise
Every commercial lender has three things that constrain their appetite for any given deal.
A credit policy that sets minimum requirements for trading history, director credit score, asset age, loan-to-value ratios, and industry eligibility. A business or deal type that falls outside the policy is declined before the application is assessed on its merits.
An industry appetite that reflects the lender's experience, portfolio concentration, and risk appetite for specific sectors. A lender with a strong equipment finance portfolio in transport and logistics applies different policy parameters to a truck loan than to a piece of specialised mining equipment. A lender with limited exposure to construction-adjacent industries may be more conservative in their LVR requirements for earthmoving equipment than a specialist with decades of experience in that asset class.
A current portfolio position that can shift independently of the overall credit policy. A lender that has recently experienced losses in a specific industry may quietly tighten criteria for that sector without publishing a formal policy change. A broker with active relationships across multiple lenders knows about these shifts as they happen. A business owner applying directly does not.
Applying to a lender whose policy, appetite, or current position does not suit the deal produces a decline. That decline generates a credit enquiry and delays the process while the applicant identifies the right lender, rebuilds the application, and resubmits.
The Australian Commercial Equipment Finance Lender Market
Several distinct lender lender categories operate in this market, each with different strengths.
Major banks offer the lowest rates for equipment finance that fits squarely within their credit parameters. These parameters are restrictive: typically two years of trading history, financial statements, strong director credit, and a relatively straightforward asset type from a recognised manufacturer. For applications that meet this standard, a bank rate is worth seeking. For anything outside it, the bank process produces delays and often a conditional decline.
Non-bank specialist asset finance lenders include providers like Pepper Money, Angle Finance, Liberty Financial, and others who have built equipment finance as a core competency. These lenders apply more nuanced policies, have deeper experience across a broader range of asset types, and are generally more flexible on trading history and director credit than banks. Their rates sit above bank rates and below the rates that unsecured non-bank lenders charge.
Specialist industry lenders focus on specific sectors or asset classes. Medical equipment finance specialists understand how Medicare billing cycles affect cash flow. Transport and logistics lenders understand truck and trailer depreciation and the security dynamics of a commercial vehicle fleet. Hospitality equipment specialists understand the operating lease structure that suits fast-changing kitchen technology. Using a specialist lender for a specialist asset type consistently produces better outcomes than a generalist.
Aggregators and broker-only lenders offer products exclusively through the broker channel. Some of the most competitive pricing in this space in Australia comes from lenders who do not advertise directly to businesses and are only accessible through accredited brokers with established relationships.
How Equipment Type Affects Lender Selection
Not all equipment types attract the same lender appetite.
Yellow goods and civil construction plant including excavators, graders, rollers, and compactors, attract strong appetite from specialist construction lenders who understand the asset values, the hire market, and the depreciation curve. The same assets attract more conservative LVRs from generalist lenders who have less certainty about secondary market values.
Commercial vehicles including trucks, trailers, vans, and utes, have a deep and liquid secondary market in Australia. Most lenders are comfortable with commercial vehicle assets, and competition for prime transport deals is strong. Age matters: a five-year-old prime mover is a different proposition from a twelve-year-old one, and lender appetite and maximum terms reflect the difference.
Medical and dental equipment including diagnostic imaging, dental chairs, and surgical tools, is understood by specialist medical finance lenders in ways that generalist providers are not. The regulatory environment, the Medicare billing cycle, and the rapid pace of technology change all affect how the asset is valued and how the finance is structured.
Hospitality and commercial kitchen equipment is often highly specialised, depreciates quickly, and carries a limited secondary market for certain items. Specialist hospitality lenders structure facilities accordingly, sometimes with shorter terms or higher residuals to match the asset's actual useful life.
Agricultural machinery including harvesting equipment, tractors, and irrigation infrastructure, has strong specialist lender appetite driven by the scale of Australian agricultural lending. Seasonal cash flow patterns are understood. Seasonal repayment structures that align loan obligations with harvest timing are available.
Specialised or bespoke equipment including custom manufacturing plant, specialist research equipment, and prototype tooling, is the hardest category to finance. Secondary market value is low or nonexistent. Most generalist lenders will not advance against it. Specialist lenders with experience in the relevant sector, or structures that rely heavily on business cash flow rather than asset security, are required.
What Lenders Assess in a Commercial Equipment Finance Application
Beyond the standard credit framework of serviceability, conduct, and security, applications for this product are assessed on asset-specific factors.
Asset age. Most lenders set a maximum age at the end of the loan term, typically ten to fifteen years for standard commercial equipment. An asset that would be twelve years old at loan maturity on a five-year term is approaching the limit for many lenders. Older assets attract shorter maximum terms and higher deposit requirements.
Asset condition. New equipment from a manufacturer or authorised dealer is straightforward. Used equipment requires either a dealer invoice, a private sale agreement, or a valuation report from an independent assessor. The lender needs to verify that the asset is worth at least the loan amount.
Manufacturer and model recognition. A Caterpillar excavator is a known commodity in Australian commercial equipment finance. An equivalent machine from a manufacturer with limited Australian market presence may attract a more conservative LVR from lenders who have less certainty about resale values and parts availability.
End use. Equipment used in a business's core operations is assessed differently from equipment being added to a hire fleet. Hire equipment generates revenue from third parties and carries different utilisation risk. Some lenders have specific policies for hire businesses. GPS Finance identifies the lenders most active in your specific asset category
Frequently Asked Questions
What is the maximum loan-to-value ratio for commercial equipment finance in Australia?
For new equipment from a recognised manufacturer, most lenders will advance up to 100% of the purchase price for businesses with strong credit profiles and trading history. For used equipment, the maximum LVR typically ranges from 70% to 90% depending on asset type, age, and lender appetite. For highly specialised or aged equipment, advance rates may be lower. The LVR reflects the lender's confidence in the asset's resale value if they ever need to realise the security.
Can I finance second-hand machinery through a commercial lender?
Yes, though the terms differ from new equipment finance. Most lenders will advance against used machinery provided the asset age meets their maximum age policy, condition can be verified, and the price can be supported by a dealer invoice or independent valuation. Low-doc facilities for used equipment are available from specialist lenders up to $500,000. Above that threshold, a full document assessment is standard.
Does the brand of equipment affect what rate I get?
Indirectly, yes. Recognised brands with deep Australian secondary markets attract stronger lender appetite, which translates to more competitive pricing. Equipment from less common manufacturers, where secondary market values are uncertain, may attract a higher rate or a lower advance rate to compensate for the lender's reduced certainty about asset recovery value.
Can I access equipment finance if I have existing hire purchase commitments?
Existing hire purchase and chattel mortgage commitments appear in the credit assessment as current obligations that reduce debt service capacity. They do not disqualify a new application, but they reduce the amount of additional debt the serviceability calculation supports. Businesses with multiple existing equipment finance facilities should present a clear schedule of existing commitments alongside new application documents so the lender can calculate consolidated serviceability accurately.
What is the difference between equipment finance and an equipment lease?
A chattel mortgage gives the business ownership from purchase, with the lender holding security. A finance lease means the lender owns the asset and the business pays to use it. At the end of the lease, the business can return the asset, extend the lease, or pay a residual to take ownership. The ownership structure, tax treatment, and balance sheet treatment differ between the two. Your accountant should be involved in the structure decision before the facility is arranged.
Further Reading
- What Lenders Look for in Business Equipment Finance
- Equipment Purchase Financing for Small Business
- Business Vehicle Finance in Australia
GPS Finance Group (CRN 000575797) is an Authorised Credit Representative of AFAS Group Pty Ltd (ACL 414426). AFCA Member ID 119860. General advice only — consider whether this information is appropriate for your circumstances.