Machinery and plant finance

As with heavy vehicles, most lenders assess the age of the machine at the end of the term rather than at settlement. Hours matter as much as years on yellow goods, and service history matters as much as both.

Age

Read at end of term

Hours

As telling as years

Make

Parts and resale depth

Seller

Dealer, private, auction

Records

Service history

Attachments

Priced with the machine

A common, well-known make with parts availability and an active second-hand market is easier to fund than a rare machine that only three businesses in the country would buy. That is not a judgement on the machine. It is a judgement on what happens if it has to be sold.

This is the part of asset finance most business owners have never had explained to them. If the business owns plant outright, a financier can buy that plant and finance it back to you. You keep operating it exactly as before. The purchase price comes back into the business as cash.

For an owner carrying an ATO balance, a stack of unsecured facilities, or a working capital gap ahead of a big job, this is often the route that does not involve the family home. It is the strategic use of asset finance rather than the obvious one.

1. 01

   List what the business owns outright

   Go through the plant register, not just the machines front of mind. Older items with a solid resale market are frequently worth more to a financier than owners assume.

2. 02

   Confirm title and PPSR position

   The asset needs to be genuinely owned clear, with no registered security interest outstanding from an earlier loan that was never discharged.

3. 03

   Establish value

   Lenders work to their own view of value, generally supported by a valuation or inspection. Purchase price from years ago is not the number.

4. 04

   Document the purpose

   What the funds are for, and how the business services the new repayment. A clear, documented purpose makes the difference on this type of application.

5. 05

   Structure and settle

   The financier acquires the asset and finances it back to you. Funds are released, and the equipment stays exactly where it is.

A plant finance decision balances the asset against the borrower. A strong asset can carry a thinner borrower file, and a strong borrower can carry an older asset. Both weak at once is where deals fail.

• Asset class, make, age, hours and the depth of the secondary market
• Whether the seller is a dealer, a private party or an auction house
• ABN age, GST registration and how long the business has genuinely traded
• Financials, BAS and bank conduct on a full doc file, or declarations on low doc
• Directors’ credit files and whether the directors own property
• Contracted work the asset will perform, where it exists and can be evidenced
• Any ATO position, and whether an arrangement is in place and being met

Yellow goods

The earthmoving family: excavators, dozers, rollers, skid steers, telehandlers. Traded actively, which is why lenders are comfortable with them.

Secondary market

Who else would buy this machine, and how quickly. It is the question underneath most plant credit decisions.

Clear title

Owned outright with no registered security interest outstanding. A discharge that was never completed on an old loan is the usual surprise here.

Sale and leaseback

The financier buys plant you already own and finances it back to you. The equipment stays in place and the capital returns to the business.

Director guarantee

A personal undertaking to stand behind a commercial facility. Ask what security is being taken before documents, not at them.

Low doc

Assessment on ABN, GST registration, the asset and declarations rather than full financials, often with a property-ownership test.

1. 01Send the supplier quote, including attachments, freight and installation
2. 02Confirm the purpose: purchase, refinance of an existing facility, or sale and leaseback
3. 03Settle the structure, term and any balloon or residual before approaching a lender
4. 04Assemble the borrower file, full doc or low doc, and disclose any ATO balance
5. 05Place with the lenders whose appetite matches the asset class and age
6. 06Clear conditions, complete valuation or inspection where required, arrange insurance
7. 07Settle: the financier pays the supplier and the security interest is registered

Straightforward purchases from a dealer move quickly. Sale and leaseback and older private-sale machines take longer because of valuation and verification. We will tell you which timeline you are on before you commit to a delivery date.

Asset finance solves a timing problem. It does not solve a margin problem. If the business is losing money on every job, releasing capital from the plant register buys months and adds a repayment, and the underlying position gets worse rather than better.

• If the funds would cover a structural trading loss rather than a timing gap, more debt is not the answer
• If a statutory demand or a wind-up application is already on foot, the timeline may be shorter than any finance process
• If the business is genuinely insolvent, the right professional is a registered insolvency practitioner, not a broker
• If the tax debt is the core problem, deal with the tax debt properly rather than funding around it

We will tell you which of those you are in. Saying it early is more useful than writing a facility that delays the same conversation by six months.