Reviewed by Corey Marino Founder & Finance Broker, FBAA & AFCA member
Last reviewed 27 July 2026 · About Corey →
On this guide
Equipment finance and business loans can both fund growth, but they solve different problems. The best structure depends on what the money will buy, what security is available and how the repayment fits the business.
Equipment finance
Equipment finance is tied to an identifiable business asset such as a truck, excavator, medical device or production machine. The asset generally supports the facility, which can improve pricing or available terms compared with unsecured lending.
Common structures include a chattel mortgage, finance lease or hire purchase. Ownership, GST and tax treatment can differ, so obtain accounting advice for your business.
Equipment finance tends to suit:
- a defined asset with an invoice or sale agreement;
- equipment expected to produce income over several years;
- businesses wanting to preserve cash rather than buy outright; and
- transactions where an optional balloon fits the asset replacement plan.
Business loan
A business loan provides funds for a broader purpose. It may be secured or unsecured and can cover stock, marketing, fitout, wages, acquisitions or mixed working capital needs.
Because the funding is not always backed by a specific asset, lenders may focus more heavily on trading history, cashflow and the director's profile.
Compare more than the advertised rate
Look at the total cost, fees, repayment frequency, security, guarantees, early repayment rules and any balloon or residual. A lower scheduled repayment can mean a larger amount remains at the end.
Match the finance term to the useful life of the asset or project. Long term debt for short lived working capital can create a mismatch; an overly short equipment term can put unnecessary pressure on cashflow.
A useful decision rule
If the need is one identifiable income producing asset, start by comparing equipment finance. If the need is broader and cannot be linked to one asset, compare business loan and cashflow options. When both are possible, assess the full structure side by side rather than assuming one category is always cheaper.