Quick answer
New businesses can get equipment finance, because the asset itself backs the loan. Lenders weigh the equipment, your deposit, your industry experience and your personal credit and assets more heavily when there is little trading history. A deposit, a personal guarantee, quality equipment from a reputable supplier and a clear plan for the income it will generate all improve the odds.
Key points
- With no trading record, the lender leans on the asset, your deposit, your experience and your personal financial position
- A genuine deposit often matters more than anything else on a start-up application
- New equipment from an established supplier is easier to finance than older or specialised items
- Directors or owners are usually asked for personal guarantees, so understand what that means before you sign
- A short, factual plan showing how the equipment earns money helps a credit assessor say yes
A new business has an odd problem. The equipment that will make it money is the thing it can’t afford yet, and the thing lenders most like to see, a trading history, is the one thing it can’t produce. A mobile mechanic with a signed-up van fit-out, a barista with a lease and a quote for a machine, a landscaper with the first big mower: each runs into the same wall.
The wall has a door, though. Equipment finance is one of the more forgiving corners of business lending for start-ups, because the loan has its own security. This guide explains how lenders think about a new business, what carries weight in place of trading history, and how to improve your chances before you apply.
Why is equipment finance easier than other loans for new businesses?
An unsecured business loan rests mostly on the business’s income, which a new business can’t yet prove. Equipment finance rests on the asset. If the borrower stops paying, the lender can recover and sell the machine. That makes the lender’s risk smaller, and it explains why some lenders will consider businesses with just months of trading while an unsecured lender would not.
The asset doesn’t excuse everything. Lenders still want to believe you will repay from earnings, and they know new businesses fail more often than established ones. So they look for reassurance elsewhere. For the general mechanics, start with how equipment finance works.
What do lenders weigh when there is no trading history?
Expect assessors to go through these in roughly this order:
- The equipment. New, from a recognised supplier, with a serial number and a resale market, is the easiest. Used or niche items need more support.
- Your deposit. Cash in the deal shows commitment and reduces the amount at risk.
- Your experience. Ten years as an employed electrician before going out on your own is far more reassuring than a career change.
- Your personal credit and position. Repayment history, other debts and, if you own property, your assets.
- The plan for earnings. A signed contract, a lease, a list of customers or pre-orders makes income less theoretical.
- Guarantees or extra security. A personal guarantee, or a second asset.
Read our guide to business loans and personal guarantees before agreeing to any, because it explains what you’re signing.
Which new businesses find it easiest?
Roughly, the more your business resembles one the lender already understands, the easier it is. Examples that often fare well:
- Trades starting out on their own, where the owner has years of employed experience and the equipment is a standard ute or tools.
- Food and beverage operators with a lease and a recognised commercial machine, though hospitality as an industry attracts caution.
- Transport owner-drivers with an existing contract and a standard truck or van.
- Health and beauty practitioners with qualifications and a lease for a suite.
Harder cases include unusual assets, businesses with no relevant experience, and equipment that the lender can’t easily resell.
What does a start-up application pack look like?
Keep it short and factual. Lenders appreciate completeness more than volume.
| Item | Why it helps |
|---|---|
| ABN, ACN and business structure details | Confirms who is borrowing |
| Quote or invoice for the equipment | Shows price, supplier, serial number |
| ID and personal financial position | Basis for assessing owners |
| Bank statements, business and personal | Shows conduct and funds for the deposit |
| Contract, lease or letters of intent | Shows where income comes from |
| One page on the plan | Experience, customers, expected earnings |
If you have a basic cash flow forecast, include it. Our guide to cash flow forecasts for a business loan shows what lenders like to see. For a general list, use the business loan documents checklist.
A worked example
Take an invented case. A refrigeration technician leaves a company job after eleven years and registers an ABN in July. She needs a $55k van with a fit-out, and has saved $11k. She has a clean personal credit file, a mortgage in her name and three commercial customers who have said they’ll send work.
A lender looking at this sees: new business, but strong industry experience, a 20 per cent deposit, a standard vehicle, a clear income source and a guarantor with assets. That combination can be approved even with no trading history. The same technician with no deposit, a used specialised vehicle and no customers lined up would find it much tougher.
The lesson: you can’t produce history, but you can produce a deposit, experience and evidence of demand.
If you are in that position, a short enquiry will show you what is realistic.
How can I improve my chances?
- Save a deposit before you apply. It lowers the lender’s risk more directly than anything else.
- Choose standard, new equipment from a reputable supplier where you can.
- Clean up your personal credit first. Our guide on how to improve your business credit score has practical steps, and personal files matter early on.
- Avoid multiple applications at once. Several enquiries in a short time can look like desperation.
- Offer a guarantor or additional security if you have it and are comfortable with the risk.
- Time your application with a contract in hand. A signed job turns a hope into a forecast.
- Consider a shorter term if you expect to upgrade soon. See leasing versus buying business equipment.
What are the risks for a new business?
Debt taken on before income arrives is riskier than debt taken on later. Be realistic about how long the equipment takes to start earning, leave some buffer in your cash, and ask what happens if you need to sell or hand the asset back early. A balloon payment can ease early repayments, but the lump sum still arrives, as the guide on balloon payments explains.
Be careful with personal assets. A guarantee backed by your home has consequences if the business struggles.
What if the bank says no?
A bank may be a good option once you have trading history and meet its criteria, and an offer from a bank is worth taking seriously. Many banks, though, ask for a minimum trading period or financials that a new business can’t show, so a decline is common and says little about your ability. Look next at lenders who specialise in newer businesses, a larger deposit, or a different structure. Our pages on business loans with an ABN under 12 months and under 6 months cover realistic routes, and the start-up business loans page shows alternatives to equipment finance.
Starting out and need equipment? Tell us what you’re buying
You’ve done the hard part by starting. If a piece of equipment is what stands between you and your first paying customers, we’re happy to look at it with you. The enquiry takes about a minute, and enquiring has no credit check, so your credit file stays as it is.
Your details aren’t spread among a lot of lenders; a real person reads your enquiry, thinks about your deposit, experience and the asset, and rings you to talk it over. Give us honest numbers about how long you’ve been going, what you’re buying and what you can put in, and we can aim at the right option the first time.
Frequently asked questions
Can I get equipment finance with a brand-new ABN?
Sometimes. Some lenders will consider businesses trading for less than six months, usually with a deposit, strong personal credit, relevant experience or additional security. Others set minimum trading periods such as 12 months. The only way to know is to ask about your specific asset and situation.
How big a deposit do start-ups need?
There's no universal figure. Lenders commonly want more cash in when the business is new, the asset is used or specialised, or the owner's credit is thin. Offering a deposit at the outset, rather than waiting to be asked, usually improves the conversation.
Do I need a personal guarantee?
Often, yes. When a business has no trading history, the lender looks to the owners' personal standing. A guarantee means that if the business can't pay, you may be personally responsible. Read it carefully, and see how guarantees work before agreeing.
Does my personal credit file matter?
Yes, particularly early on. For sole traders and small companies, the owner's personal credit file is often assessed alongside the business. Defaults, recent missed payments or many recent applications can all be raised.
Is it better to lease or buy as a new business?
Leasing preserves cash and reduces the up-front commitment, which can suit uncertain early months. Buying through a chattel mortgage gives ownership and tax benefits for eligible businesses. The right answer depends on how fast the equipment dates and whether you can handle the final payment.
What if the lender declines me?
Ask why. Often a larger deposit, a different asset, a guarantor or a few more months of trading changes the answer. Different lenders have different appetites for start-ups, so a decline from one doesn't predict the next.