The short answer: business and equipment finance is not one product, it is a category. The main split is secured finance, where a specific asset like a vehicle, trailer or machine backs the loan and rates are usually lower, and unsecured finance, which covers cash flow rather than a physical thing and usually costs more because nothing secures it. For buying an asset, GST-registered businesses most often use a chattel mortgage or a hire purchase arrangement. Which one suits you depends on your GST position, your cash flow, and how your accountant wants the asset to sit on your books. So the first move is not choosing a product, it is knowing which category you are actually in, and having the right conversation with your accountant before you sign anything.
Business finance breaks into two broad groups. Secured finance is attached to a specific asset, usually anything with a VIN or serial number, and the asset itself is the security, which generally means lower rates. It covers cars, utes and trucks, trailers, machinery like excavators and forklifts, and commercial fit-outs. Unsecured finance is not tied to an asset and is used to cover cash flow rather than buy something physical, so it typically carries higher rates. That includes cash flow finance to bridge a gap between money going out and coming in, and invoice or debtor finance, where you borrow against invoices you have issued but not yet been paid. Long payment terms are common in trades and construction, so this is often just how those industries get paid, not a sign something has gone wrong.
For buying an asset, the two common structures are a chattel mortgage and a hire purchase arrangement, and the right one depends on your circumstances. With a chattel mortgage, the business owns the asset from day one and the lender holds a mortgage over it until the loan is repaid. A hire purchase spreads payments over time under a slightly different ownership structure. The choice affects how the asset and the loan sit on your books and how the tax treatment works, which is exactly why your accountant should weigh in before you commit. This is a structure decision, not just a rate decision.
It depends on how the asset is used and how your business is structured. Financing through the business generally means the loan and the asset sit on the business's books, which can affect tax treatment and cash flow reporting. Financing personally keeps it separate from the business entirely. Neither is automatically right. If you are a sole trader or the loan is personally guaranteed, business finance can also affect your personal borrowing capacity later, including for a future home loan, so the sequencing of major purchases is worth a conversation.
Even when a business can pay cash, financing is often still worth considering. Paying cash means no interest and simpler books, which suits a business with strong reserves well beyond the purchase. But financing keeps cash in the business for wages, stock, repairs or an opportunity, and it avoids tying up capital in an asset that depreciates. Interest on business finance is generally tax deductible, which can lower the real cost of borrowing, though deductibility depends on your circumstances and is a question for your accountant. There is no single right answer, so it is worth running both scenarios past your accountant before deciding.
The instant asset write-off can bring forward a deduction, but the detail matters and it is genuinely an accountant conversation. In plain terms, it lets eligible small businesses deduct the full cost of a qualifying asset in the year they buy and start using it, rather than spreading it over years, and it applies per asset. According to the ATO, the threshold was $20,000 per asset for the 2025-26 financial year for businesses with aggregated turnover under $10 million, with the asset needing to be first used or installed ready for use by the relevant date. A permanent $20,000 threshold from 1 July 2026 was announced in the 2026-27 Budget but was not yet law at the time of writing. Because most vehicles cost more than the threshold, the whole vehicle often will not qualify, so confirm your eligibility with your accountant.
The process is more straightforward than most people expect. It usually runs: get pre-approved so you know what you can borrow before you settle on the exact asset, find and agree to purchase the vehicle or equipment, send through the invoice or contract of sale, sign the loan documents online, then settlement, where funds are released to the seller, and you collect the asset. One thing worth knowing: business and equipment finance is largely unregulated compared with consumer lending, so exit and early payout fees can be significant depending on the lender and how the contract is written. That is why setting the loan up correctly from the start matters, and why it is worth discussing a shorter term upfront if you might pay it out early.
What is the difference between secured and unsecured business finance? Secured finance is backed by a specific asset, like a vehicle or machine, which usually means a lower rate. Unsecured finance is not tied to an asset and is used for cash flow, so it typically costs more because the lender has less to fall back on.
Can I claim the instant asset write-off on a work vehicle? Usually only if the vehicle costs under the threshold, which was $20,000 per asset for 2025-26. Most vehicles cost more and fall under depreciation rules instead. Your accountant can confirm your eligibility and the current threshold.
Should I finance equipment or pay cash? It depends on your reserves, your growth stage and how you feel about debt. Financing keeps cash in the business and interest is generally deductible, while paying cash avoids interest. Running both scenarios past your accountant is the sensible step.
What is a balloon payment on equipment finance? It is a lump sum left owing at the end of the loan. It lowers your regular repayments, which helps cash flow, but you still owe the lump sum at the end and generally pay more interest overall because the balance stays higher for longer.
Written by Ashley, founder of Noma Finance. Before becoming a finance and asset broker, Ashley worked at car dealerships and has personally held every loan type Noma helps with. Noma compares options across a panel of lenders to help people find finance that fits their situation, explained in plain English.
Our free Business and Equipment Finance Guide walks through the structures, the accounting questions and the numbers in more detail, and we are here if you want to talk it through with your accountant in the loop. Download it here.
This article is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial, credit or tax advice. Tax outcomes, including deductibility and the instant asset write-off, depend on your circumstances and current ATO rules, so speak with a licensed tax adviser or accountant. Thresholds and rules change, so the information is current as at the date below only. Check the linked sources for the latest.
Last updated: July 2026.
- Australian Taxation Office, Instant asset write-off: https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/depreciation-and-capital-expenses-and-allowances/simpler-depreciation-for-small-business/instant-asset-write-off
- Australian Taxation Office, $20,000 instant asset write-off for 2025-26: https://www.ato.gov.au/businesses-and-organisations/small-business-newsroom/20000-instant-asset-write-off-for-2025-26
- ASIC Moneysmart, Car loans: https://moneysmart.gov.au/loans/car-loans
Sources last checked July 2026.
Written by Ashley, founder of Noma Finance. Before becoming a finance and asset broker, Ashley worked at car dealerships, and has personally held every loan type Noma helps with. Noma compares options across a panel of lenders to help people find finance that fits their situation, explained in plain English.
This article is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial, credit or tax advice. Consider whether it is appropriate for you and seek advice from a licensed professional before making a decision. Tax outcomes for novated leases and chattel mortgages depend on your circumstances, so speak with a licensed tax adviser or accountant. Any figures used are illustrative only.
