October 5, 2026
How equipment finance works for Australian small businesses: chattel mortgages, leases, rental, balloons and the $20,000 instant asset write-off.
New machinery, a work vehicle, IT equipment or a commercial kitchen can transform what your business can do. Paying cash ties up money you might need elsewhere. Equipment finance spreads the cost over the life of the asset, and the equipment itself usually serves as the security.
Your business owns the equipment from day one, and the lender holds a mortgage over it until the loan is repaid. If you are registered for GST, you may be able to claim the GST upfront. Interest and depreciation may also be deductible. This is the most popular option for small businesses.
The lender owns the equipment and leases it to you for a fixed term. Lease payments may be tax deductible. At the end, you can usually pay a residual to take ownership, upgrade or return it.
Suits equipment that goes out of date quickly, such as technology. You rent the equipment, upgrade regularly and never own it. Payments are generally treated as an operating expense.
A balloon is a lump sum at the end of the term that lowers your regular repayments. It can help cash flow, but you will pay more interest overall. Match the balloon to what the equipment is likely to be worth at the end, so you are not left owing more than it is worth.
Estimate repayments with our equipment finance calculator on the equipment finance page.
Small businesses with aggregated turnover under $10 million have been able to immediately deduct eligible assets costing less than $20,000 each. In the 2026–27 Budget, the government announced the $20,000 threshold would continue on an ongoing basis from 1 July 2026. Assets costing $20,000 or more go into a small business depreciation pool.
The write-off is a tax deduction, not a cash rebate, and timing rules apply, such as when the asset is first used or installed. Always confirm with your accountant, including whether announced measures have passed into law, before you buy for tax reasons.
Many lenders offer low-doc equipment finance for established businesses, sometimes with just an ABN, GST registration and a supplier invoice for amounts under a set limit.
Both can be financed. Used equipment and private sales may need an inspection or valuation, and terms may be shorter for older assets.
We compare banks and specialist asset finance lenders to find the right structure for your business. See equipment finance or book a free call.
This article is general information only and does not take into account your objectives, financial situation or needs. Government schemes, tax rules and lender policies change, so check current details before acting. Propple Pty Ltd is an Australian Credit Representative (537767) of AFSL 384704.
