Starting out on your own? Vehicle and equipment finance for new businesses

Why new businesses are assessed differently

Standard business finance usually relies on financial statements, tax returns and a track record. Without those, lenders have less to go on, so fewer of them will lend and those that do may look more closely at you personally. Specialist lenders that consider new businesses often do so on a low doc basis. Our guides to low doc business loans and low doc car loans explain how that works.

What lenders commonly look for

Criteria vary between lenders, but for a new business lenders commonly look for:

• An active ABN and full identification
• GST registration, which some lenders prefer but may not require
• Your personal financial position, including personal tax returns, bank statements, assets and debts
• Your personal credit history
• Evidence of the business ahead: contracts, work lined up, a business plan or industry experience
• In some cases a deposit, additional security or a guarantee

Expect some trade-offs

Because the lender is taking on more uncertainty, a new business may be offered a higher rate, a lower maximum loan amount, or be asked for a larger deposit or extra security than an established business would. That isn't always the case, and a strong personal financial position and relevant experience can help.

Choose the structure with your accountant

Once a lender is willing to fund the asset, there's usually a choice of structure, such as a chattel mortgage, finance lease or hire purchase. Each is treated differently for tax and accounting. Your accountant knows how your business is set up and is the right person to help you choose. We'll explain the practical differences, but we don't give tax advice.

How to give yourself the best chance

Get your personal finances in good shape before you apply, keep your business and personal banking separate from the start, and pull together whatever evidence you have of the work ahead. Talking to a broker early, before you've committed to a vehicle, helps you understand what you're likely to be able to borrow and which lenders to approach.

General information only

This article is general information only. It does not take your personal circumstances into account and is not personal credit, legal, tax or financial advice. Lender criteria for new businesses vary and change over time. Talk to your accountant about business structure and tax. All finance is subject to lender assessment and approval.

Related finance