If you’ve been working very hard all year for your employer while harbouring plans to work for yourself, now could be the time to put those plans into action. Going out on your own can be a brave move. But bravado is not necessary. You don’t need to do it completely alone. Utilising available services and resources, especially with acquiring new business equipment finance, can be a very astute move.
Starting and successfully operating a self-employed business in any industry sector can be challenging, with sourcing affordable loans one of the biggest setbacks. As specialists in asset acquisition financing, we support new operators with the lenders and the expertise to source the machinery financing they need to get their operation underway.
New Business Equipment Finance: Overview
A key difference between machinery loans for established and new enterprises is the documents provided in the loan application. A standard commercial loan application form requires operators to provide financials for their enterprise. These financials can include the annual and current accounts, bank statements, tax returns, BAS returns and other documents. Some lenders also require an enterprise to have been trading for a minimum of 12-24 months in order for businesses to be eligible for loan approval.
While established businesses do have all these financials, a new operation typically does not. They require specialised loans which are referred to as Low Docs or No Docs – without or with less documentation or without financials. This description can also refer to enterprises that have been operating for less than 12 months.
These types of loans are not usually offered through traditional lending channels such as the major banks. They are offered through specialised non-bank lending channels. Many of these lenders provide loan services via a network of selected brokers, which can include Jade Equipment Finance.
Eligibility, Criteria and Conditions for New Business Equipment Finance
While the basic description of loans for new enterprises is No or Low Docs, there are eligibility requirements. Enterprises do need an Australian Business Number and ID. The approval criteria vary with individual lenders and may include providing 6 months of turnover figures. For operators in the very initial stages of setting up with no trading figures at all, our brokers work to secure workable financing from one of our 80+ lenders that does approve applications with no financials.
New operators can expect different loan conditions compared with loans for established businesses. These can include the financials of the owner and their credit profile being included in the application assessment. Additional assets or a personal guarantee may need to be provided as loan collateral by the owner. There may be a limit placed on the borrowing which may require a deposit to be made on the machinery purchase. Interest rate differences typically apply due to the higher perceived risk of lending to a start-up.
Choice of Commercial Credit Facilities for New Businesses
While special criteria and conditions can apply to loans when starting up, the same credit facilities can be used as used by established businesses. These facilities include Leasing, Rent-to-Own, Hire Purchase and Chattel Mortgage. Deciding which is the most suitable facility for a particular set-up involves assessing the features of each in relation to the accounting method to be used by the entity, the preferences in regard to posting major assets to the balance sheet, strategies around tax benefits, and taking into account the overall financial objectives of the enterprise. It is strongly advised that operators refer to an accountant to discuss how the accounts will be set-up and as such, which facility will work best for them.
Eligible Assets for New Business Loans
Commercial assets are broadly defined as any tangible items which are used in a commercial enterprise. That can include vehicles, plant, machinery, equipment, fixtures, fittings, IT and technical devices, and others.
While conditions apply to the loan itself, new operators can apply for loans for a wide range of machinery. This can include backhoes, diggers, graders, skidsteers, cranes, engineering machinery, medical devices and equipment, IT and tech, and many more. The construction and earthmoving sectors can be extremely popular industries for contracting, and machines from major manufacturers such as CASE, CAT, Bobcat and many others may be financed for new operators.
Securing Expert Support for New Business Equipment Financing
While there are special lending conditions and criteria for start-ups, there are no barriers or obstacles to accessing experts to support and secure the required loans. Individuals setting up their own new enterprise can directly access expert support to secure new business equipment finance through Jade Equipment Finance.
No referral is needed to contact us or to use our specialist broker services. Just phone or request a quote to get started. Our brokers work closely with operators to understand their requirements and find which of our lenders is their best match. We handle sourcing and negotiating the financing and assisting with settlement.
If your plan is to go out on your own in 2025, don’t do it alone. Connect with us for expert support and access to financing to get your operation happening and prospering.
For expert support and assistance with securing new business equipment finance, contact Jade Equipment Finance on 1300 000 003
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
