Can Startups Get Equipment Finance?

Harder, not impossible. With no trading history a lender looks at your industry experience, the asset, the deposit, property and your credit file. What helps, what hurts, and what to expect.

The honest answer is that it is harder with a new business, and it is not impossible. New ABNs finance trucks and machinery in Australia every week. The path is narrower, the evidence is different, and expectations need to be realistic about what will be asked of you.

Finance on this site is arranged by Overdrive Commercial Funding, an authorised credit representative of Connective Credit Services Pty Ltd, Australian Credit Licence 389328. Applications are subject to eligibility criteria, individual lender criteria and credit assessment, and nobody can tell you the outcome before a file is looked at.

What a lender looks at when there is no trading history

Ordinarily a lender reads BAS lodgements and bank statements to see whether the business can service a payment. With a new ABN that evidence does not exist yet, so the assessment leans on everything else.

• Industry experience. Years driving for someone else, or running plant for an employer, before starting out. It carries more weight than people expect, because it speaks to whether the revenue assumptions are realistic.
• Property ownership. Not usually taken as security for an equipment facility, but read as evidence of stability, and one of the strongest things a new business can bring.
• Deposit. Real money in reduces the amount financed and the lender’s exposure at once.
• The asset. A mainstream truck with an observable resale market is better security than something specialised, and that matters more when the borrower is unproven.
• How long the ABN and GST registration have been active. Months of history reads differently to a registration issued last week.
• The directors’ credit files. With no business history, personal credit conduct is much of what is left to assess.
• Work in hand. A signed contract, subcontractor agreement or purchase order is the closest thing to trading history a new business has.

What actually helps

In rough order of how much difference it tends to make: verifiable work in hand, relevant industry experience, property ownership, a deposit, and a mainstream asset bought from a dealer.

A signed contract does the most work because it converts a forecast into something a lender can read. If you have a rate and a committed volume from a principal contractor, put it in the application rather than describing it.

Experience matters because it is the difference between someone who has done the work and someone who has calculated it. Set out the years, the roles and the equipment you operated. It belongs in the file even where no form asks for it.

A deposit changes the arithmetic on both sides. It lowers what you need to borrow and lowers what the lender stands to lose, and for a new ABN it frequently makes the difference between a conversation and an approval. Be ready to show where it came from.

Buying from a dealer is simpler than a private sale for any application, and simpler counts for more when the rest of the file is thin.

What low doc really means for a new ABN

Low doc means proving turnover from bank statements and BAS instead of lodged returns. A brand new business has neither, so low doc as it is normally described does not really apply — there is nothing to substitute in.

What is available instead tends to be one of these: a facility supported by property or a substantial deposit; a smaller facility on an asset with strong resale; a structure priced for an unproven borrower; or a wait until there are two BAS lodgements to show. The low doc ceilings that apply to established ABNs — commonly around $250,000 without full financials after two years of trading — are not the starting point for a new entity.

Registering for GST is worth understanding rather than guessing at. Registration is required once turnover reaches $75,000, and can be done voluntarily below it. Many commercial lenders expect GST registration, and where you are registered they will want the BAS lodgements to be up to date. Whether voluntary registration suits your position is a question for your accountant.

Common reasons a new business gets declined, and what to fix

• No deposit and no property, on a large facility. Fix: reduce the amount, add a deposit, or start with a smaller asset.
• A credit file with unresolved defaults or judgments. Fix: deal with them and get the record updated before applying.
• Unpaid ATO debt with no arrangement. Fix: get the arrangement documented and show it is being met.
• No demonstrable work in hand. Fix: get something in writing from the principal, even short of a full contract.
• An asset that does not fit — too old for the term wanted, too specialised, or priced above valuation. Fix: change the asset or bridge the gap with a deposit.
• An application that reads as a hobby rather than a business. Fix: ABN, GST where relevant, business bank account, insurance, and a clear description of what the business does and who pays it.
• Applying to several lenders at once. Fix: do not. Multiple credit enquiries in a short period is itself a negative signal, which is why working one file across a panel differs from shopping yourself around.

Realistic expectations

A new business should expect more questions, more supporting documents, and a narrower set of lenders than an established operator with three years of financials. A deposit is more likely to be required. The term available may be shorter, and the asset choice may be constrained by what a lender is comfortable holding.

What should not be expected is a promise. Approval depends on the file, and any operator who tells you the answer before the assessment is telling you something about themselves rather than about your application.

The other realistic expectation is that this gets easier fast. Two BAS lodgements and a clean payment record on a first facility changes the conversation substantially, which is a reason to size a first purchase so the payment is comfortable rather than at the limit of what can be serviced.

Whether any of this fits your situation depends on your circumstances, and it is worth getting your accountant’s view on structure and timing before you apply. Our finance calculator will show what a repayment looks like at different deposits and terms, which is a useful thing to know before the first conversation.