Quick answer · Q.D02
Yes. Business loans are widely used to buy equipment, machinery, tools, technology and vehicles. You can use an unsecured loan, finance secured over the asset itself, or a property-secured loan for larger or unusual purchases. From 1 July 2026 the $20,000 instant asset write-off is permanent for eligible small businesses with aggregated turnover under $10 million, which can affect timing — check with your accountant.
Key points
- Equipment and vehicles can be funded unsecured, secured over the asset, or secured on property.
- The $20,000 instant asset write-off is permanent from 1 July 2026 for eligible small businesses (aggregated turnover under $10 million, per asset under $20,000).
- Match the loan term to the asset's useful life — don't still be paying for a machine you've replaced.
- A supplier quote or tax invoice is the key purpose document.
- Instant asset write-off
- $20k per asset, permanent from 1 July 2026
- Turnover limit
- Aggregated under $10m
- Purpose evidence
- Quote or tax invoice
What kinds of equipment can a business loan fund?
Almost anything the business genuinely uses to earn income:
- Vehicles — utes, vans, trucks, trailers, cars used for business.
- Machinery — excavators, CNC machines, forklifts, printing presses.
- Trade tools and plant — generators, compressors, scaffolding.
- Hospitality equipment — commercial ovens, coffee machines, cool rooms.
- Technology — computers, servers, point-of-sale systems, software set-up.
- Medical, dental and allied health equipment.
- Farm equipment — tractors, harvesters, irrigation.
The purpose test is simple: will it be used in the business? Personal vehicles and household items don’t qualify — see using a business loan for personal expenses.
Which finance route suits an equipment purchase?
| Route | How it works | Suits |
|---|---|---|
| Finance secured over the asset | Lender registers an interest over the item on the PPSR | New or late-model vehicles and standard equipment |
| Unsecured business loan | Lump sum based on turnover, typically $5,000 – $500,000 | Smaller items, used gear, mixed purchases |
| Property-secured loan | Secured on property, $20,000 – $5,000,000 | Large, specialised or older equipment; bundling with other needs |
| Lease | You use the asset; the lessor owns it | Tech that dates quickly; frequent upgrades |
business.gov.au’s lease-or-buy guide notes that leasing usually has a lower upfront cost and easier upgrades, while buying can be cheaper long term and gives you an asset that can serve as collateral. For what makes something good security, see what you can use as security.
How does the instant asset write-off affect timing?
The ATO announced in its small business newsroom that the $20,000 instant asset write-off is permanent from 1 July 2026 for eligible small businesses with aggregated annual turnover under $10 million. It applies per asset: each eligible asset costing less than $20,000 can be immediately deducted, and you can claim multiple assets if each meets the threshold.
What this means in practice:
- There’s less pressure to rush purchases before 30 June each year just in case the concession disappears.
- Buying before 30 June can still bring a deduction into the current year — whether that helps depends on your tax position.
- Assets of $20,000 or more follow the normal small business depreciation rules.
It’s a tax question as much as a finance one, so check with your accountant before timing a purchase. Our guide to EOFY finance questions covers the June decision in more detail.
How long should an equipment loan run?
Match the term to the asset’s useful working life. A laptop that’s obsolete in three years shouldn’t be on a five-year loan; a well-built excavator that’ll work for a decade can justify a longer term. Two tests:
- Will the asset still be earning when the last repayment is made?
- Do the repayments fit the business’s slowest month?
More on choosing terms in how long you can borrow for.
What do lenders want to see?
- A quote or tax invoice from the supplier, showing the item, price and GST.
- Details of the asset — make, model, year, serial or VIN for vehicles.
- Business bank statements and ID.
- For private sales, evidence of ownership and a PPSR search showing the item is clear.
If you’re weighing up which route suits your purchase, a short enquiry gets a real person’s view — without a credit check at that stage.
What about buying used or at auction?
Used equipment can be excellent value, but lenders look harder at age, condition and resale market. Asset-secured lenders may cap the age they’ll accept. Where the item doesn’t fit asset-based finance, an unsecured or property-secured loan can fund it regardless of age. Always search the PPSR before buying second-hand, so you don’t inherit someone else’s security interest.
How does an equipment purchase come together? (Illustrative example)
Illustrative only — invented business and figures.
A Geelong joinery needs a new CNC router ($165,000) and a second-hand van ($28,000) to take on a large kitchen-cabinet contract.
- The router is financed over a medium term, secured over the machine, with repayments set around the contract’s monthly progress payments.
- The van, being older, is bought with a small unsecured loan.
- The owner’s accountant confirms the van doesn’t qualify for the $20,000 write-off (it costs more), and the router follows normal depreciation rules.
Two assets, two routes, each matched to the item.
What about equipment that needs installing or fitting out?
Some purchases come with costs beyond the sticker price: delivery, installation, electrical work, plumbing, training, software set-up or modifications to the premises. Lenders are generally comfortable funding these as part of the purchase when they’re on the supplier’s quote or backed by separate invoices. Asset-secured finance may only cover the item itself, though, so a mixed purchase — a commercial kitchen line plus the electrical upgrade to run it, for example — sometimes suits an unsecured or property-secured loan better.
List every associated cost when you enquire, rather than just the machine. A loan that covers the equipment but not the installation leaves you finding the rest from working capital at exactly the wrong moment. If the work extends to the premises themselves, our page on borrowing for a fit-out covers the building side.
Should I pay cash instead?
Sometimes. If paying cash leaves a comfortable buffer, it avoids finance costs. If it drains working capital right before wages, BAS or a slow season, financing can be the safer move — you keep cash for day-to-day running and let the equipment pay for itself over time. Our page on covering a cash flow gap looks at the buffer question.
Get the equipment working sooner
A good equipment purchase starts earning from the day it arrives. Enquiring doesn’t involve a credit check, your details aren’t blasted to a crowd of lenders, and a real person matches the finance route to the asset and your cash flow. Please include the item, its price and whether it’s new or used on the form, so the option you hear fits the purchase first time.
Frequently asked questions
Is it better to lease or buy business equipment?
It depends. business.gov.au notes leasing generally has a lower upfront cost and easier upgrades, while buying can save money in the long run and lets you use the asset as collateral. The right choice depends on how long you'll use it and your cash flow.
What is the instant asset write-off?
It lets eligible small businesses immediately deduct the business portion of an asset costing less than $20,000, rather than depreciating it over time. The ATO says it's permanent from 1 July 2026 for businesses with aggregated annual turnover under $10 million.
Can I borrow to buy second-hand equipment?
Yes. Used equipment can be financed, though lenders consider its age, condition and resale value. A property-secured or unsecured loan can suit items that asset-based lenders won't take as security.
Can I buy equipment from a private seller?
Often, yes. The lender will want evidence of the price and ownership, and it's wise to search the PPSR to check the item isn't subject to someone else's security interest before you buy.
Does the equipment have to be new to claim the write-off?
No. The ATO's instant asset write-off applies to eligible new or second-hand assets, subject to the rules. Your accountant can confirm how it applies to a specific purchase.