Financing Your First Machine: A Guide for New Businesses

Starting a new business is an exciting yet challenging endeavour.

Whether you’re an industry veteran branching out on your own or an employee looking to invest in machinery, the initial steps can be daunting—especially when it comes to financing your first piece of equipment. Traditional banks often hesitate to lend to newcomers, but don’t let that deter you. There are alternative paths to secure that crucial first loan. Read on to discover the guide to financing your first machine.

The Challenges of Traditional Financing

New businesses often face hurdles when approaching traditional banks for equipment finance. The lack of a track record can be a significant roadblock. But with a skilled broker at your side “there are other ways up the mountain.”

Alternative Financing Options

Several second-tier lenders specialise in equipment finance, including for used machines and private sales. While the interest rates may be slightly higher, these options are often more economical than dry hiring equipment. Plus, they allow you to build equity in your machinery.

The 12-Month Strategy

A common approach for newcomers is to finance with a second-tier lender for 12 months, often with a 60% or 70% residual. After a year, you’ll have “runs on the board,” making it easier to refinance with a lower-rate lender.

The Power of a Small Deposit

Some financiers offer competitive rates for clients who can make a small upfront deposit. If you’re a homeowner, consider leveraging your home loan to raise this initial amount. With property values on the rise, this could be a smart move.

Timing Your ABN Registration

If you’re planning to start a business, consider registering your Australian Business Number (ABN) sooner rather than later. Having an ABN for over a year can make financing easier, even with mainstream lenders.

Consult a Trusted Broker

At Finlease, we pride ourselves on being more than just brokers; we’re your partners in business growth. We offer tailored solutions and build lifelong relationships. If you’re contemplating a new venture, it’s worth speaking to a reputable finance broker to explore your options.  Contact us.