What Lenders Look for in an Equipment Finance Application

The borrower profile

A lender starts by understanding who is applying. For equipment finance this may be a sole trader, company, trust, partnership or self-employed applicant. The lender will usually check ABN history, GST status where relevant, trading history and whether the business activity makes sense for the equipment being funded.

A contractor buying an excavator, a workshop buying hoists, or a medical practice buying equipment all need different context. The lender wants to see that the applicant has a credible use for the asset and a realistic path to repay the finance.

For newer businesses, lenders may ask for more information or a stronger deposit. For established businesses, trading history and bank conduct can help support the application.

The equipment being financed

The asset itself matters. Lenders commonly look at equipment type, age, condition, supplier, invoice amount, resale market and whether the equipment is essential to business operations. A mainstream forklift or loader may be assessed differently to highly specialised machinery with limited resale demand.

New equipment can be simpler because warranty, supplier and valuation details are usually clear. Used equipment may still be financeable, but the lender may want more comfort around age, condition, private sale checks or valuation.

If the purchase includes attachments, freight, software, fit-out components or installation, the quote should separate those items clearly so the lender can decide what can be included.

Business cash flow and repayment capacity

Repayment capacity is central. Lenders commonly review bank statements, trading revenue, BAS, financial statements or tax returns depending on the product and lender. They want to see that the business can handle the proposed repayments alongside wages, rent, supplier costs, tax obligations and existing debts.

Cash flow can be seasonal, especially for WA businesses exposed to construction cycles, agriculture, transport contracts or project work. Seasonality does not automatically stop finance, but it needs to be explained.

A broker can help frame the request so the lender understands how the equipment supports income or efficiency rather than simply adding another debt.

Credit profile and existing debts

Credit profile is part of the assessment. Lenders may look at repayment history, defaults, enquiries, existing facilities and conduct on current loans. A strong credit profile may open more options, while credit issues may narrow the lender field or increase document requirements.

Existing debts also matter. If the business already has vehicle finance, overdrafts, credit cards, tax debts or other equipment loans, the lender will assess total commitments. Refinancing higher-cost debts may be relevant in some scenarios, but it must be assessed carefully.

Being upfront about existing liabilities helps avoid delays and mismatched lender submissions.

Deposit, equity and loan amount

Deposit or equity can influence lender appetite. Some lenders may finance up to a high percentage of the asset value for strong applicants and suitable assets. Other scenarios may require a deposit, especially where the equipment is older, specialised or the business is newer.

The loan amount should match the invoice and business need. If the customer wants to include setup or ancillary costs, those should be documented early.

A larger deposit can reduce repayment size and lender exposure, but it also uses business cash. The right balance depends on cash flow and lender criteria.

Low-doc and full-doc assessment

Low-doc equipment finance may be available for some ABN holders or self-employed applicants, but it is still assessed. Lenders may ask for bank statements, BAS, asset details, accountant information or other evidence to support income and business activity.

Full-doc assessment may use financial statements, tax returns and more detailed trading information. This can be useful for larger purchases, complex entities or businesses seeking sharper terms.

The best pathway depends on the applicant profile, asset type and urgency.

How to prepare a stronger application

Start with a clear quote or invoice, business/entity details and a short explanation of how the equipment will be used. Prepare bank statements or financials if requested, and be ready to explain existing debts and the expected benefit of the equipment.

If the equipment will increase production, reduce outsourcing, open new revenue or replace unreliable machinery, say so. Practical context can help the lender understand why the purchase makes sense.

Figure Out Finance helps package that story and compare suitable lender options from a broad panel.

Practical example: equipment finance assessment

A Perth trade business buying a $68,000 scissor lift may have strong revenue but irregular monthly cash flow because invoices are paid after project milestones. In that scenario, the lender may focus on bank statement conduct, deposit, existing vehicle finance and whether the lift will support confirmed work. The asset is identifiable and useful, but the repayment still needs to fit the business cash cycle.

If the same business wants to include transport, attachments and setup costs, those should be clearly shown on the supplier quote. The lender can then decide what can be financed instead of discovering extra costs after approval. This is why a complete quote and a clear business explanation matter.

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