Finance the whole equipment project

Build the installed-cost budget

List the equipment cash price, transport, installation, testing, training, insurance and any site modifications. Then add the operating cash needed before the asset contributes receipts. Confirm with the provider which items are eligible; do not assume they all fit under an equipment-only facility.

Compare ownership and use

A purchase loan, lease and hire-purchase arrangement can produce different ownership outcomes and exit costs. Read the contract for title, insurance, maintenance, return conditions and purchase options. NAB’s finance overview lists equipment loans and finance leases as separate routes, illustrating why the label alone is not enough.

Source: NAB: equipment and other business finance ↗

• What happens at the final payment?
• Is a residual or balloon due, and how will it be funded?
• Can the equipment be upgraded or sold during the agreement?

Model the commissioning delay

Illustrative only: equipment costs 90,000 and installation costs 10,000. If operations need another 8,000 per month while commissioning takes two months, the project needs 116,000 before an owner contribution and finance costs. A one-month delay adds another 8,000 under these assumptions. Ask whether repayments start at delivery, acceptance or another contractual milestone.

For used equipment, investigate the asset

Identify the serial number, seller, service history, operating hours and remaining useful life. Verify existing finance and the release process in the relevant jurisdiction. Australia’s PPSR guidance explains the repossession risk associated with registered security interests; other countries use their own systems and procedures.

Source: PPSR: searching ↗

• Budget for inspection and immediate repairs.
• Match the financing term to a defensible service-life estimate.
• Obtain advice on tax and accounting treatment rather than assuming every payment is deductible.