Whether you’re a plumber buying a new service vehicle, an electrician investing in testing equipment, a builder purchasing a skid steer, or a carpenter upgrading your workshop, the right equipment makes the difference between winning jobs and missing out. But financing equipment as a sole trader or small trade business works differently from financing as a larger company. At Mortgage & Finance Advisory, we help tradies across Geelong, the Surf Coast, Melbourne, and regional Victoria access equipment finance that’s structured for how trade businesses actually work.
This guide covers everything tradies need to know about equipment finance, from what you can finance and how much you can borrow to the documentation required, tax benefits, and tips for getting approved with the best possible rate.
| Trade | Common Equipment Financed | Typical Range |
|---|---|---|
| Building/Construction | Excavators, skid steers, scaffolding, concrete equipment | $20,000 to $300,000 |
| Electrical | Testing equipment, cable pullers, service vehicles, power tools | $5,000 to $100,000 |
| Plumbing | CCTV drain cameras, jet blasters, pipe locators, service vans | $10,000 to $150,000 |
| Landscaping | Mini excavators, trucks, trailers, mowers, turf equipment | $15,000 to $200,000 |
| HVAC/Refrigeration | Recovery units, vacuum pumps, brazing equipment, vans | $10,000 to $120,000 |
| Carpentry/Joinery | CNC routers, panel saws, planers, dust extraction, workshop fit-out | $10,000 to $250,000 |
| Painting | Spray equipment, scaffolding, vehicles, sandblasting gear | $5,000 to $80,000 |
| All Trades | Work utes, vans, trailers, tool fit-outs, canopies | $20,000 to $120,000 |
Most tradies operate as sole traders or partnerships rather than companies. This affects how lenders assess your application in several important ways.
Personal liability: As a sole trader, you’re personally liable for any business finance. There’s no separation between your personal and business assets. This means lenders look at both your business income and personal financial position when assessing your application.
Income assessment: Lenders use your taxable income from your personal tax return to assess affordability. If you’ve been aggressive with tax deductions (which most tradies are, legitimately), your taxable income may be much lower than your actual cash flow. Some lenders are better than others at understanding this, and a broker can direct you to lenders who “add back” certain deductions when calculating your true income capacity.
ABN history: Your ABN registration length is a primary factor. Lenders categorise sole traders differently at less than 1 year, 1-2 years, and 2+ years of ABN history. The longer your ABN has been registered, the more lending options are available and the better the rates.
| Feature | Full-Doc | Low-Doc |
|---|---|---|
| Documentation required | 2 years’ tax returns + financials | ABN + ID + self-declaration |
| ABN requirement | 12+ months typically | 24+ months (most lenders) |
| Interest rates | Lower (from 5.99%) | Higher (+0.5-2%) |
| Max loan amount | Higher ($500K+) | Typically up to $150K-$250K |
| Approval speed | 2-5 business days | Same day to 2 business days |
| Best for | Larger purchases, best rates | Quick access, simpler process |
Low-doc doesn’t mean “no checks.” Lenders still verify your ABN, run a credit check, and may review your BAS lodgement history or bank statements. The key difference is they don’t require formal financial statements or tax returns. They rely instead on your declaration of income combined with verification of your business activity through BAS or bank statements.
An electrician in Geelong needed a $75,000 service vehicle (Hilux with canopy and tool fit-out). His accountant hadn’t finished the previous year’s tax return, and his declared taxable income was low due to legitimate deductions. His bank declined the application. We submitted to a specialist low-doc lender who assessed his 4-year ABN history, clean BAS lodgement record, and business bank account showing consistent deposits averaging $12,000 per week. Approved at 7.49% within 24 hours with a chattel mortgage structure. Monthly repayment of $1,500 over 5 years with a $15,000 residual, comfortably within his cash flow.
Equipment finance offers significant tax benefits that effectively reduce the real cost of your purchase. The instant asset write-off allows eligible small businesses to claim an immediate deduction for the full cost of qualifying assets in the year of purchase. For a tradie earning $120,000 and buying a $60,000 ute with equipment, the instant asset write-off could generate a tax deduction of approximately $19,800 at the 32.5% marginal rate, effectively reducing the real cost of the vehicle to $40,200.
With a chattel mortgage, you can also claim the GST on the purchase price upfront. On that $60,000 ute (plus GST = $66,000), claiming back $6,000 in GST on your next BAS provides an immediate cash flow benefit within weeks of purchase.
Keep your BAS up to date: Lenders check your ATO lodgement history. Having all BAS lodged on time demonstrates financial responsibility and makes low-doc approvals much smoother.
Maintain a clean credit file: Even one missed payment or default can significantly impact your available rates. Check your credit report before applying (free through Equifax or illion) and address any issues first.
Separate business and personal accounts: This isn’t just good business practice. It makes it easier for lenders to verify your business income from bank statements, which is particularly important for low-doc applications.
Time your purchase strategically: If your ABN is approaching the 2-year mark, waiting a few months can open up significantly more lending options and better rates. Similarly, if your next tax return will show higher income, waiting for it to be lodged can improve your application.
Use a broker who understands trade businesses: A broker experienced with sole traders and subcontractors knows which lenders are friendly to trade income, which ones add back deductions when assessing capacity, and which offer the best low-doc terms.
Your borrowing capacity for equipment finance depends on several factors, and the good news is that tradies often have stronger applications than they expect. Lenders assess equipment finance differently to home loans. They’re primarily focused on whether the asset will generate income and whether your business can comfortably cover the repayments.
As a general guide, most lenders will approve equipment finance where the monthly repayments represent no more than 30-40% of your monthly business revenue. A plumber turning over $15,000 per month could typically borrow enough to cover repayments of $4,500-$6,000 per month, which translates to roughly $200,000-$270,000 in equipment finance over 5 years depending on the interest rate.
For low-doc applications (common for tradies), many lenders will approve up to $150,000 with minimal documentation: just your ABN, identification and a credit check. Above $150,000, you’ll generally need to provide financial statements and tax returns, though some specialist lenders have higher low-doc thresholds for tradies in high-demand industries.
Starting a new trade business often requires significant equipment investment before you’ve established a track record. While this presents challenges, there are real pathways to finance for newer operators.
If your ABN is less than 12 months old, your options include specialist start-up lenders who assess your trade qualification and experience rather than just business history, asset-backed loans where the equipment itself provides sufficient security for the lender, guarantor arrangements where a family member or business partner with established credit supports your application, and larger deposits (typically 20-30%) to offset the limited trading history.
After your first year, more options become available. Many mainstream lenders will consider your application with 12+ months of bank statements showing consistent revenue. The key at this stage is demonstrating that your business has regular income, manageable expenses and a clear need for the equipment to maintain or grow your revenue.
With two or more years of trading history, you’ll have access to the full range of lenders and products. Most equipment finance applications for established tradies with clean credit are simple, with competitive rates and fast approval timeframes.
Financing personal vehicles as business assets. If your ute or van is used significantly for personal purposes, you need to be honest about the split. Claiming 100% business use when the vehicle is also your family car creates issues at tax time and can result in ATO penalties. Keep a logbook for at least 12 weeks to substantiate your business use percentage.
Not shopping around. Many tradies go straight to their bank or the dealer’s finance company without comparing alternatives. A finance broker compares dozens of lenders at no cost to you and can often save you 0.5-1.5% on your interest rate, worth thousands over a typical finance term.
Over-capitalising on equipment. It can be tempting to buy the biggest and best, but financing a $150,000 excavator when a $90,000 model would handle 95% of your jobs ties up cash flow unnecessarily. Be realistic about what you actually need for the work you do, and upgrade as your business grows.
Ignoring the tax benefits. Many sole traders don’t fully utilise the tax deductions available through equipment finance. Depreciation, interest deductions, GST credits and the instant asset write-off can reduce the effective cost of your equipment by 30-50%. Work with your accountant to ensure you’re claiming everything you’re entitled to.
Not reading the fine print. Early repayment fees, balloon payment obligations and default interest rates vary significantly between lenders. Understand exactly what you’re signing up for before committing, particularly regarding what happens if you want to pay the loan off early or if you miss a payment.
Not all equipment purchases are major investments. Tradies regularly need to finance smaller items: power tools, diagnostic equipment, safety gear, and specialised hand tools. While individual items may be under $5,000, the combined cost of setting up a complete tool kit or replacing worn-out equipment can quickly reach $10,000-$30,000.
Options for smaller equipment purchases include bundling multiple items into a single equipment finance agreement (treating the whole kit as one financed asset), using a business line of credit for flexibility to buy items as needed, and credit card facilities for very small purchases (though interest rates are much higher). For any purchase over $5,000, a structured equipment finance product like a chattel mortgage will almost always be cheaper than credit card or personal loan alternatives, plus you’ll get the associated tax benefits.
Yes. Subcontractors with their own ABN are treated as self-employed sole traders for finance purposes. Lenders will assess your subcontractor income based on your tax returns, BAS, or bank statements depending on the doc level. A consistent contract history with one or two main clients strengthens your application.
Yes, most lenders allow you to bundle the vehicle purchase and fit-out (canopy, tool drawers, roof racks, etc.) into a single finance facility. This is more cost-effective than financing them separately and gives you one simple monthly repayment.
Options are limited but not zero. Some lenders will finance new ABN holders if you can demonstrate industry experience (previous employment in the same trade), have a clean personal credit history, and can provide a deposit (typically 10-20%). Rates will be higher than for established businesses, but finance is accessible.
Yes, interest on equipment used for business purposes is tax deductible. For chattel mortgages, you can also claim depreciation. For leases, the entire lease payment is deductible. Consult your accountant on the most tax-effective structure for your specific situation.
Low-doc applications for established tradies (2+ year ABN) can be approved same day. Full-doc applications typically take 2-5 business days. Having your documents ready before applying is the single biggest factor in approval speed.
We specialise in finance for tradies and sole traders. Fast approvals, low-doc options, and competitive rates from lenders who understand trade businesses.
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About the Author
Melanie McNaughton is the founder of Mortgage & Finance Advisory, helping tradies and sole traders across Geelong, the Surf Coast, Melbourne, and regional Victoria access competitive equipment and vehicle finance. With specialist lenders on her panel who understand trade income, Melanie ensures tradies get fast approvals at the best available rates.
