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Asset Finance

Asset finance involves leveraging business assets to help your business to grow. This can involve:

  1. 1 Taking out a loan to finance the purchase of new technology, equipment or tools.
  2. 2 Borrowing against the value of your existing assets.

Types of asset finance

The major types of business asset financing include:


Secured business loans require you to provide a business asset that you already own as collateral security for the lender in return for providing you with the funds you need. Secured loans can be a good option if you don’t qualify for an unsecured loan due to your credit history.

However, it’s important to understand that if you default on your secured business loan repayments, asset finance providers can seize and sell your asset to recover any outstanding debt.

Secured business loan interest and associated fees and charges are tax-deductible against your business income, provided the asset is used in your business.


Finance leases allow you to rent a business asset for a specific time period. Ownership of the asset remains with the lender, but you get to use it for the lease term and you’re usually responsible for any costs of maintaining it.

Your rental payments on a leased asset are tax-deductible against business income.


An operating lease is similar to a finance lease, except that the asset owner (the lender) is responsible for the costs of any asset maintenance.


A hire purchase agreement involves you hiring the business asset from the lender for an agreed term. When you make your last hire payment, the ownership of the asset transfers to your business.


A novated lease can be taken out on a new business vehicle as part of a tax-effective salary packaging arrangement for you or your staff. Ownership of the vehicle remains with the lender. Repayments are deducted from you or your employee’s before-tax salary.


A chattel mortgage is another option for financing a new business vehicle. It involves a lender providing you with a loan that’s secured against the vehicle via a mortgage.

Like any secured loan, asset finance companies can repossess a vehicle under a chattel mortgage arrangement if you default on your regular loan repayments. When you have repaid the loan in full, the lender releases the mortgage.

Key asset financing considerations

The right commercial asset finance solutions will depend on your individual business needs and financial situation. Key considerations for asset or equipment finance include:

  • Asset finance interest rates, fees and other financial terms and conditions
  • Repayment flexibility to suit your business’ cash flow
  • The tax-deductibility of your repayments


  • How much finance you need
  • The asset-based refinancing finance term (which usually ranges from one to seven years)
  • Whether it’s better to own or lease your asset. For example, leasing your equipment may allow you to upgrade more easily as technology inevitably improves over time

Frequently Asked Questions


Asset financing is a strategy that allows businesses and individuals to acquire assets without making full upfront payments. It involves obtaining loans or leases to purchase equipment, machinery or other valuable items essential for operations. The assets themselves serve as collateral, making it a secure form of financing. This method enables businesses to access necessary resources while managing cash flow effectively.


Asset finance involves obtaining funds to purchase assets such as equipment, machinery or vehicles. Instead of paying the full cost upfront, the borrower makes regular payments over a fixed period, with interest. The asset serves as collateral, reducing the lender’s risk. Once the term ends and all payments are made, the borrower gains full ownership. This method enables businesses to acquire essential assets without significant initial expenses.


Yes, small businesses and start-ups can typically access asset finance. Lenders may consider factors like the business’s credit score, cash flow and the value of the asset being financed.


Getting an asset loan with bad credit can be challenging, but not impossible. Some lenders might still consider your application, although you may face higher interest rates or stricter terms. It’s essential to research and compare options from different lenders to find the right option. Improving your credit over time can increase your chances of obtaining more favourable asset finance in the future.


Firstly, there’s a maturity mismatch, leading to potential liquidity issues if short-term liabilities can’t be rolled over or refinanced. Secondly, fluctuating interest rates may increase borrowing costs, affecting profitability. Additionally, if short-term lenders demand repayment during an economic downturn, the business may face distress. Long-term assets may not be easily sold or converted to cover liabilities, resulting in potential insolvency.

How we can help

Business asset finance and equipment finance can have serious implications for both your cash flow and your ability to grow your business. It’s important to understand the pros and cons of different asset financing options so you can choose the most appropriate one for your business.

At ARG Finance, our experienced asset finance broker can help you to find the right option. We’ll take the time to understand your business’ needs, goals and financial circumstances before recommending appropriate asset finance lenders and asset financing options for you. Whether you want asset finance for startups or need an asset finance repayment calculator, you can count on us to advise and assist you in all areas of asset finance in Melbourne.

Contact us today to find how our asset finance services can help your business with short-term asset finance or financing of long-term assets.

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