Home > Business Loans > Small Business Equipment Loans
Small Business Equipment Loans
Compare different loan offers with Savvy to find the best one for your small business to purchase equipment.
Author
Savvy Editorial TeamFact checked
The features and benefits of small business equipment loans
No asset security required
Perhaps the most important factor for small business loans is that security isn’t required, as we partner with lenders offering small unsecured business loans which are more accessible.
Choose a comfortable repayment term
You get the power to decide your loan term to ensure your business is capable of comfortably supporting its repayments, with potential periods ranging from three months to five years.
Borrow from $5,000 and up
Unsecured finance is highly flexible when it comes to the amount you’re able to borrow, with minimums of $5,000 and a maximum of up to $500,000 available with some lenders.
Buy any type of equipment
There aren’t any restrictions on how you use the loan, only that it must be for business purposes, which means you can buy any equipment you like, large or small.
Secure an affordable loan
With a great deal of competition in the market when it comes to business finance, you can take advantage with a loan offering a low interest rate and low or no fees to boot.
Make additional repayments and save
Many lenders also enable you to pay above and beyond the minimum required amount to help you maximise your overall savings should your business become able to do so.
Types of business loan
The most common type of business finance, unsecured loans enable businesses to access the funds they need without attaching an asset to the loan as security. Some lenders may allow you to borrow up to $500,000 and, because there's no collateral, offer same-day approval.
If your business already owns valuable assets, such as property or expensive equipment, you may choose a secured business loan instead. These loans may increase your borrowing power beyond what an unsecured loan can offer and, crucially, typically come with lower interest rates.
Business loans don't always have to be worth hundreds of thousands. If you're operating a small business and need a boost to help you keep on top of your expenses or expand your company, you may be able to take out a loan starting from as little as $5,000 and unlock further capital.
Just because you don't have all the required documents for a standard business loan doesn't mean you're out of options. Low doc finance enables you to use alternative documentation, such as other business financials, in the application process to access the funds you need.
A commercial line of credit allows you to draw from your loan account whenever your business needs access to their funds, instead of managing a lump sum and repaying it like a regular loan. This can add flexibility to your finance arrangement, providing money when you need it.
Invoice finance presents another option to business operators looking to free up cash through outstanding invoices yet to be paid by their customers. Your invoice finance can either be invoice discounting or factoring, which present different options when it comes to your invoices.
A common reason for seeking out a loan is to purchase commercial equipment. You can do this either with an unsecured arrangement or one with the equipment itself as collateral, with the latter potentially increasing your borrowing power and lowering your interest rate.
With this finance, when your business purchases product, your supplier provides an invoice which you send to your financier and pledge to repay by a set date. From there, your supplier sells the invoice to your financier at a discounted rate, while you repay the full amount to your financier.
Under an inventory finance agreement, your lender pays your supplier directly for inventory, which allows it to be signed off and sent to you. From there, you can pay off your debt within a pre-determined period to your lender, which may be longer than the regular debtor period.
An overdraft facility is attached to an existing financial account belonging to your business, such as a transaction or savings account, and enables you to borrow up to a set limit after the account’s balance reaches zero. These overdrafts are repaid with interest, but only on what you use.
You may simply be in a position where your business needs a boost to its cash flow. If this is the case, there’s a range of stop-gap solutions which may be suitable for your situation, from standard unsecured loans to specialist cash flow loans, invoice finance or even an overdraft.
Why compare business loans through Savvy?
100% free service
It won't cost you a cent to compare a range of business loans through Savvy, enabling you to come back at any time.
Reputable lending partners
You can compare business loan offers through a range of trusted Australian lenders, giving you more confidence in the process.
Online comparison process
You can fill out our simple online form to generate business finance quotes tailored to your business' needs in minutes.
How to compare small business equipment loans
Eligibility criteria
Before anything else, you should make sure the lenders you’re comparing will consider your application to begin with. Every lender will have a series of eligibility criteria in place when assessing loans for small business owners. These most commonly come in the form of minimum requirements relating to monthly turnover and trading time.
In most cases, you’ll need to have been trading for at least six months and generating $5,000 or more in monthly revenue, although these may differ between financiers.
Interest rates
Interest rates can vary widely between different business loan offers, so it’s important to compare loans based on this factor. Even small differences in interest rate can amount to savings of hundreds of dollars, if not thousands, which is especially the case if you’re looking to take out a larger business loan.
However, it’s important to note that you may be able to claim the interest on your business loan repayments as a tax deduction, so if this is the case, you may not need to worry as much about it.
Fees
Business loans generally don’t charge too many fees, but it’s important to keep these in mind when selecting your loan. The most prominent of these is likely to be an establishment fee, which is often charged as a percentage of your loan amount of up to 3%. There are other fees which may apply, though, such as early repayment fees (charged when you pay your loan out early), monthly and/or annual account fees and late payment fees.
These can add up too, so consider them when comparing loans.
Borrowing range
The amount your lender is willing to approve will also have a significant impact on your decision. While unsecured small business loans can range from $5,000 to $500,000, not all lenders will stick to this range. For instance, many will set their minimum amount at $10,000 or higher, while others may cap their loans at closer to $300,000.
If you find that the loan amount you’re looking for is affected by this, you should keep an eye out to narrow your comparison options further.
Borrowing terms
Perhaps one of the most important aspects to keep in mind, though, is how long you can take to repay the loan. As mentioned previously, your business’ comfort in repaying the loan should be prioritised above almost all else. As such, you should always ensure the lender you choose (and the others you’re comparing) offers the loan term your business is most comfortable with.
Don’t settle for a longer term than you want and pay more, or a shorter term than you need and risk discomfort.
Your small business equipment loan questions answered
Yes – unsecured business loans can be used for any number of purposes in addition to the purchase of your asset. You can request to borrow any amount you’re capable of borrowing, regardless of whether that’s more or less than the cost of the machinery you’re looking to buy. You might want to cover other expenses in addition to the equipment, such as fitting out your shop or adding to your business’ overall cashflow.
Equipment finance is another option when it comes to purchasing business equipment. This is a secured loan which utilises the asset itself as collateral for the finance deal, meaning the size of your loan will be tied to the cost of the equipment. By doing this, you can access lower interest rates and potentially longer repayment terms of up to seven years. However, these loans are less flexible in terms of what they can be used for, limiting themselves to the purchase of the asset only. If you don't have an eligible asset available, you'll likely need to apply for a standard business loan as a self-employed owner.
Yes – there are a range of different leases available if you’re not wanting to commit to the purchase of your equipment. Leases are less expensive, as you’re not covering the cost of purchasing the asset in your payments, and come with added benefits such as up to 100% of your repayment being tax-deductible. Savvy can help you find out more about different lease types and secure a great deal for your business.
There are a variety of individual variables which could impact your interest rate, such as:
- The size of the loan you’re after
- Your proposed loan term
- Your business’ current cashflow and available revenue
- Your business’ trading time
- You and your business’ credit scores
Yes – you can still get an equipment or machinery loan if you’re a new business. However, equipment loans for a startup business are generally more difficult to obtain, as they’re seen as being riskier than a loan to an established business. As such, you’re likely to find that these loans come with more restrictions on borrowing and higher interest rates, as well as requirements for business owners to meet (such as experience running a business in the past).
Not really – seasonal businesses are as eligible to borrow as any other business. Provided you’re capable of maintaining your repayments all year round, there shouldn’t be too many issues taking out a loan. Some lenders will be able to provide you with a specialised seasonal payment plan which skews a greater proportion of your repayments away from your off-season months, but this isn’t always the case.
Helpful business loan guides
Still looking for the right finance for your business?
Explore a range of business loan options suitable to your financing needs and apply online through Savvy today.