Financing your business

Asset and equipment finance – what you need to know

If you’re looking to buy a large piece of equipment but don’t want to max out your lending limits, asset finance may be an option for you. We break it down. 

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In this article

How asset finance works

Asset finance is a means of acquiring assets for your business without using existing business capital. The assets are used as security for the loan, which means in many cases, the asset finance does not impact your business’ other credit lines.

If you have the right sort of business, asset finance can be a viable alternative to more traditional forms of lending. So it might pay to consider this option when you’re looking into new financing arrangements.

Asset rental is an alternative to asset finance. In this case, the financier purchases the asset and leases it to your business. This may be appropriate for assets that quickly depreciate in value or need frequent upgrading, such as computers.

Who might consider asset finance

Businesses with expensive equipment requirements, particularly those that require equipment to help their business grow, can benefit from asset finance.

Since the terms of asset finance are often more flexible than a traditional lending product (such as a loan), it has the potential to help businesses with seasonal fluctuations in their cash flow.

Benefits of asset finance

There are a few different reasons why your business might benefit from asset finance.

  • In most cases, the asset being purchased will provide the loan security, allowing your remaining assets to be used for other credit lines.
  • The asset finance can be tailored to match the life of the asset and payments can be scheduled to align with its ability to generate cash flows for your business.
  • Similarly, loan repayments can also be structured to match seasonal variations in your business’ cash flow.

Disadvantages of asset finance

While asset finance can be beneficial, there are some potential downsides and risks:

  • Using the asset as loan security means there’s a risk you'll lose important assets needed to run your business
  • The value of assets can vary and will generally depreciate in value over time – this may leave your business with an asset that’s worth less than you planned
  • If long-term funding is your goal, there may be other more effective options.

Assets you might consider finance for

A diverse range of assets could be used, such as machinery, equipment, and even buildings.

Types of assets commonly considered for asset finance:

  • Manufacturing plants
  • Helicopters
  • Jet planes
  • Equipment for mining, construction, and technology industries.

Difference between a loan and asset finance

The main difference between asset finance and a standard loan is the first is secured, and the second is (traditionally) not. 

Business and personal loans are more likely to be unsecured, which means they don’t require an asset as security. 

Every business has unique financial needs, so it’s important to seek advice on the best financing option for you depending on your goals.

Contact an ANZ Business Specialist

Our specialists understand your kind of business and the challenges you face as a business owner. We can help you figure out how to make your business grow and succeed.

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Important information

We’ve provided this material as a complimentary service. It is prepared based on information and sources ANZ believes to be reliable. ANZ cannot warrant its accuracy, completeness or suitability for your intended use. The content is information only, is subject to change, and isn’t a substitute for commercial judgement or professional advice, which you should seek before relying on it. To the extent the law allows, ANZ doesn’t accept any responsibility or liability for any direct or indirect loss or damage arising from any act or omissions by any person relying on this material.

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