How to apply for asset finance in 5 steps [2022]

Alex Patsellis

Tuesday, 17 November 2020

Every business needs the right tools to reach their full potential, and asset finance (also known as equipment finance) can be a great way to secure the tools you need without disrupting cash flow. Here’s what you’ll need to apply for asset finance, summarised in five steps.

1. Do your research

Equipment finance covers just about any asset you need for your business, from new office fit-outs to heavy machinery. Before you shop around for loans and lenders, it’s a good idea to research the type of asset you want and drill down your options, including preferred brands and models. This will give you an idea of how much cash you’ll need to borrow.

2. Gather required documentation

Lenders require documentation to assess your eligibility as a borrower, and determine the rate and amount they’ll offer. How much documentation you’ll need to supply depends on your lender and choice of loan, but there are a few things you’ll need on hand, regardless of your decision:

  • A driver’s license, passport or Medicare card so your lender can identify you
  • Cash flow projections so that your lender can look over your assets and liabilities

You might also be asked for:

  • Bank statements
  • Cash flow statements
  • Balance sheets
  • Profit and loss statements

For low-doc equipment loans, you’ll need to provide:

  • A declaration of your income (either from an accountant or yourself) or
  • An affordability statement

3. Work out which type of asset finance you need

There are a few different types of asset finance you can apply for, including chattel mortgages, hire purchase agreements and leases. The type of asset finance you choose depends on your access to collateral, the level of flexibility you’re after and how long you want to hang on to your equipment.

Some types of asset finance allow you to use the equipment you’re borrowing as security for the loan, which can help to reduce your rate. Others allow you to return your asset when it’s no longer needed, or on the other hand, gain full ownership of the asset at the end of your term. There are lots of options to suit different needs—it all depends on your preferences.

4. Look for the right lender

Rates, fees and eligibility criteria vary significantly across lenders, and to make things even more complicated, a good interest rate doesn’t necessarily equal a better or cheaper product. In some cases, a loan with a lower interest rate may lack flexibility or come with additional fees and charges, making it more expensive long-term.

It’s also worth noting that banks are typically more selective than non-bank lenders, have more stringent criteria and longer application processes. Non-bank and alternative lenders are more lenient and often approve and settle funds much faster than banks. The tradeoff is higher interest rates, but this can be a worthwhile investment for smaller businesses or those who need fast access to their asset.

5. Apply for finance

Once you’ve decided on the lender and loan product that suits you best, follow your lender’s application process. Turnaround times vary, but depending on your lender and choice of loan, it can take up to a few months to approve.

Alternatively, you can contact a lending expert at Valiant who will streamline the application process for you. Rather than researching, comparing and applying on your own, simply let one of our experts know which asset you’re looking at and they’ll do the heavy lifting.

We apply on your behalf and can settle funding for you in as little as a day, while helping you cut through the red tape typically seen when applying for finance traditionally. This means less paperwork and higher chances of approval, as we’re able to leverage our relationships with 80+ lenders.

Simply give us a call on 1300 780 568 to find out more or get started on an application. Alternatively, fill out a few details via our free online loan finder and we’ll be in touch.

Alex is a Senior Product Expert here at Valiant specialising in asset finance. He enjoys helping clients secure the right equipment for the job, so they can get on with managing their business.

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