When Melbourne businesses need to purchase or upgrade commercial equipment, understanding the approval process for equipment finance can make the difference between a successful application and unnecessary delays. Equipment Finance Brokers like Embark Financial can access equipment finance options from banks and lenders across Australia, providing businesses with comprehensive loan options tailored to their specific requirements.
Understanding Equipment Finance Applications
Applying for equipment finance involves several key components that lenders evaluate when determining approval. The loan amount, interest rate, and repayment structure depend on various factors including your business's financial position, the type of equipment being purchased, and the chosen finance structure.
The streamlined application process typically requires:
• Financial statements and tax returns
• Business registration documents
• Equipment quotes or invoices
• Cash flow projections
• Details about existing business debts
Lenders assess these documents to determine your business's capacity to service the proposed equipment finance facility.
Types of Equipment and Finance Structures
Equipment finance covers a broad range of commercial assets, whether you're buying new equipment or upgrading existing equipment. Common categories include:
Office and Commercial Equipment:
• Office equipment such as computers and furniture
• Work vehicles including trucks and trailers
• Commercial kitchen equipment
Heavy Machinery and Specialised Equipment:
• Construction equipment like excavators and cranes
• Agricultural machinery including tractors and graders
• Industrial equipment such as dozers and specialised machinery
• Factory machinery for manufacturing operations
Two primary finance options dominate commercial equipment finance:
Chattel Mortgage: The business owns the equipment immediately while the lender holds security over the asset as collateral. This structure often provides tax advantages and flexibility in managing the vehicle or equipment.
Hire Purchase: The lender owns the equipment during the life of the lease, with ownership transferring to the business upon completion of all payments. This option typically involves fixed monthly repayments that help businesses manage cashflow effectively.
The Approval Process Timeline
Commercial equipment finance approval follows a structured timeline that varies depending on the complexity of the application and loan amount requested. Initial assessments typically occur within 24-48 hours for straightforward applications, while more complex proposals involving substantial loan amounts or specialised machinery may require additional evaluation time.
Equipment Finance Brokers can expedite this process by ensuring applications are complete and properly structured before submission. They understand each lender's specific requirements and can match your business needs with appropriate finance options.
Documentation and Assessment Criteria
Lenders evaluate equipment finance applications based on several key criteria:
- Business Financial Health: Recent financial statements demonstrate your business's ability to service debt obligations
- Equipment Type and Value: The nature of the equipment affects both the interest rate and loan terms offered
- Deposit Requirements: Some lenders require deposits, particularly for certain types of specialised machinery
- Industry Experience: Your business's experience in the relevant industry influences lender confidence
- Existing Credit History: Previous finance arrangements and repayment history impact approval decisions
Working with Equipment Finance Brokers
Professional brokers maintain relationships with multiple lenders, providing access to diverse loan options that may not be available through direct applications. They understand the nuances of different finance options and can structure applications to maximise approval prospects while securing appropriate terms for your business needs.
Brokers also assist with:
• Comparing interest rates across multiple lenders
• Structuring repayment terms to align with business cash flow
• Preparing comprehensive applications that address lender requirements
• Managing the approval process from application to settlement
Factors Affecting Interest Rates
Several variables influence the interest rate offered on equipment finance:
• Equipment age and type: Newer equipment typically attracts lower rates
• Loan term: Shorter terms often result in lower interest rates
• Business credit profile: Strong financial performance improves rate negotiations
• Deposit amount: Larger deposits can reduce interest costs
• Industry risk: Some sectors are considered higher risk by lenders
Preparing for Equipment Finance Applications
Successful applications require thorough preparation. Businesses should:
• Maintain accurate financial records
• Obtain detailed equipment quotes from suppliers
• Prepare realistic cash flow projections
• Consider the optimal finance structure for their circumstances
• Allow adequate time for the approval process
Understanding these elements ensures your application presents your business in the most favourable light while demonstrating clear capacity to service the proposed equipment finance facility.
At Embark Financial, our experienced team understands the equipment finance landscape and works with Melbourne businesses to secure appropriate funding solutions. Whether you need a truck, trailer, excavator, or office equipment, we can connect you with suitable lenders and guide you through the approval process.
Call one of our team or book an appointment at a time that works for you to discuss your equipment finance requirements.
