Can you borrow against equipment you own? What a lender will count it for

Yes, you can usually borrow against equipment you own. Machinery, trucks and utes that are paid off and free of other claims can secure an equipment-backed loan, a refinance or a sale and leaseback. The lender counts each item at what it would sell for now, often on a quick-sale view, not at what you paid. Age, hours, how specialised it is and a clean PPSR record set the figure.

That last part is where most owners get a surprise. The excavator that cost a fortune three years ago is still earning every day, but on a lender’s sheet it might count for well under half of its price. This guide explains why, walks through the routes that use owned gear, and shows the checks you can do yourself before anyone else does them.

What does “borrowing against equipment you own” actually mean?

It means the equipment is the starting point, not the thing you’re buying. You already hold the asset. The question is how much fresh cash it can stand behind while you keep using it.

There are four common routes. They all lean on the same machines, but they leave you in different places.

Route	Who owns the gear afterwards	What the lender holds	Watch for
Equipment-secured loan	You	A security interest over named items, registered on the PPSR	Lending is capped by the items’ resale value
Refinance of owned gear	You	Same, often structured like a chattel mortgage	Term can outlast the machine’s useful life
Sale and leaseback	The funder, until the lease ends	Ownership itself	GST on the sale, tax adjustments, end-of-lease terms
General security over plant	You	A wider security, sometimes over all business assets	Can clash with your bank’s existing security

If you’re still deciding between borrowing against gear and a general business loan, our page on equipment finance versus a loan sets the two side by side.

How do lenders value equipment for a loan?

Start with the question this whole site keeps asking: what stands behind this loan? For equipment, the honest answer is “whatever the item would fetch if the lender had to sell it”. That gives you three different numbers for the same machine.

• Replacement or purchase cost. What you paid, or what a new one costs today. It includes GST, freight, fit-out and the dealer’s margin. Lenders mostly ignore it.
• Fair market value. What a willing buyer would pay a willing seller now, with time to find each other. A useful reference, but not the lending figure.
• Forced-sale or liquidation value. What the item brings at auction or in a quick sale after a repossession, minus the cost of collecting, transporting and selling it. This is the number a cautious lender builds from.

Your depreciated book value is a fourth number, and it doesn’t really help. Tax depreciation follows ATO effective-life rules, not the auction market. A well-kept truck can be worth far more than its written-down value, and a niche machine far less.

What makes a machine count for more, or less?

• Mobility and identity. Trucks, trailers, excavators, loaders, forklifts and tractors with serial numbers or VINs are easy to identify, collect and sell. Bolted-in production lines, cool rooms and custom fit-outs are not.
• Depth of the resale market. Mainstream makes with an active Australian second-hand market count for more than imported one-offs with few local buyers.
• Age, hours and condition. Service logs, hour meter readings and photos are the evidence. Without them, a valuer assumes the worst.
• Specialisation. A machine built for one process in one factory has a short list of buyers. That list is what the lender is really valuing.

Can I borrow against machinery that isn’t a car or truck?

Often, but the paperwork changes. The PPSR treats some heavy equipment as a motor vehicle and some as general goods, and that affects how a lender searches and registers.

PPSR guidance on buying heavy construction equipment says equipment counts as a motor vehicle if it has a unique serial number, a built-in motor over 200W and can travel faster than 10 kph. Those items can be searched and registered by serial number. Other machinery, such as some harvesters and heavy-duty tools, is searched by the owner’s details instead: the company’s ACN, or a sole trader’s name and date of birth.

In practice, that means a lender may register against each serial-numbered item, and against your business as grantor for the rest. Have a list ready that sorts your gear into those two groups. It saves a round of questions.

The PPSR check most owners skip

Before you apply, search your own equipment. An online serial-number search is $2 per search, according to the PPSR fee schedule. Do a grantor search on your own business too.

The common trip-up is a registration left behind by a finance company you paid out years ago. To a new lender, that looks like someone else still has a claim on the machine. It doesn’t matter that you know it’s settled. The new lender can’t take clean security until it’s gone.

Here’s the fix, based on PPSR dispute guidance:

1. Write to the secured party. Send an amendment demand by email or letter with the registration number, a request to remove it, your contact details and a copy of the search result.
2. Attach proof. A payout letter or final statement showing the debt is cleared.
3. Wait at least five business days. Many finance companies fix it within that window.
4. Escalate if needed. If the registration stays, you can ask the Registrar to step in by lodging an amendment statement, or seek a court order.

Do this before you apply, not during. A clean search turns a week of back-and-forth into a single line in the lender’s file.

Already holding a clean list of owned gear? Check your options and someone will tell you what it’s likely to stand behind.

What should you prepare before you ask?

Treat it like an asset register a stranger can read in five minutes:

• Make, model, year, serial number or VIN for each item.
• Hours or kilometres, and the latest service record.
• Proof of ownership: the tax invoice, or the payout letter if it was financed.
• Current photos, including the compliance or serial plate.
• Your own PPSR search results showing the item is clear.
• Recent BAS and business bank statements, because a lender still asks how repayments will be met.
• A list of any other security over the business, such as a bank’s general security agreement.

Our guide to building a funding pack covers the cash-flow half of the file in more detail.

Sale and leaseback: the tax side people forget

A sale and leaseback can release more cash than a loan on the same gear, because the funder buys it outright. But it really is a sale, and the ATO treats it like one.

• GST. If you’re registered for GST, the ATO says the sale of business assets such as machinery and vehicles is usually a taxable sale. You report it at G1 and the GST at 1A on your BAS, per the ATO’s guidance on GST and the disposal of capital assets. Plan for that GST in the BAS that covers the sale date. The cash isn’t all yours to spend.
• Balancing adjustment. Selling a depreciating asset is a balancing adjustment event. The ATO’s disposal guidance compares the sale price (the termination value) with the asset’s written-down (adjustable) value. If you sell for more than the written-down figure, the excess is generally assessable income.

That second point catches owners who wrote equipment off quickly. A machine sitting at a low written-down value, sold to a funder at market value, can create a taxable gain in the same year you needed the cash. Your accountant can model it in an afternoon. Ask before you sign, not at tax time.

A straight equipment-secured loan or refinance avoids both issues, because ownership never changes.

Illustrative example: a civil contractor with paid-off plant

Illustrative only. Not a real client, and the percentages are examples, not any lender’s policy.

A small civil contractor in regional Queensland owns three machines outright: a 20-tonne excavator, a skid steer and a tipper truck. All three are five to seven years old, serviced on schedule, and bought for a combined total well into six figures. The business needs around $150k for wages and materials to start two council jobs before the first progress claims are paid.

The owner’s instinct is “the gear cost far more than that, so it’s easy”. The lender’s sheet looks different:

• Excavator. Common make, deep resale market, good hours. Counts well.
• Tipper. Registered, VIN-searchable, easy to sell. Counts well.
• Skid steer. Older, high hours, some wear. Counts for little.

The PPSR search turns up a registration from a finance company paid out four years ago, still sitting against the tipper. The owner sends an amendment demand with the payout letter, and it’s removed before the application goes in.

On a cautious forced-sale view, the excavator and tipper together support most, but not all, of the $150k. The gap is bridged with a smaller cash-flow facility sized on the business’s bank statements. Two routes, each backed by something the business already had, and no new purchase anywhere.

If two facilities like that need to sit side by side, our guide to combining funding routes without clashing shows how to keep the security from tangling.

When is owned equipment the wrong starting point?

• The gear is old or niche. If the forced-sale figure is small, the loan will be too. Look at unpaid invoices or turnover-based funding instead.
• Your bank already holds everything. A general security agreement may already cover your plant. A second lender would need the bank’s consent, or a different asset.
• The term outlives the machine. Borrowing over five years against a machine with two good years left is a trap. Match the term to the working life.
• You need a larger figure. Property usually carries bigger amounts more simply. Property-secured options typically run from $20,000 to $5,000,000; see property-secured loans.

Your machines are already working. Let’s see what else they can do

Owning your gear outright is a strong position. It means the business has built real value, and that value can work twice: once on the job, and again as the thing standing behind your next round of funding. We look at owned plant and vehicles alongside your cash flow, so the answer is shaped around what you actually hold.

Asking takes about a minute, and your credit file stays untouched while you find out where you stand. We don’t pass your details around a pile of lenders, so you won’t be fielding a run of cold calls. A real person reads your enquiry, looks at your equipment and your trading, and phones you to talk it through.

One request: fill in the form as accurately as you can, especially what you own, how old it is and whether anyone else has finance on it. Precise answers mean the first option we bring you is the right one.

Find out what your equipment can unlock →