Published 28 September 2026. Figures and market conditions described here were current at that time and may have changed since.
Most business owners are familiar with the idea of financing a new equipment purchase. But fewer realise that equipment already sitting in their business, whether fully paid off or still being financed, may also be a source of working capital through refinancing.
The two processes are related but work differently.
Financing a new equipment purchase
When a business finances the purchase of new equipment, the lender provides funds to acquire an asset the business does not yet own. The asset then acts as security for the loan. The lender assesses the value of the equipment, the creditworthiness of the business and its ability to service the repayments over the agreed term.
The structure can take several forms, including a chattel mortgage, finance lease or hire purchase, each with different implications for ownership, tax and GST. The right choice depends on how the asset will be used and the business’s tax position.
Refinancing equipment you already own
Refinancing existing equipment works differently. Rather than funding a new purchase, the business uses an asset it already owns as security to unlock working capital. The lender assesses the current market value of the equipment and may provide a loan against a portion of that value. The business receives a cash injection it can use for other purposes, while making repayments on the new facility over time.
This is sometimes called asset refinancing or equity release on equipment. A fleet of vehicles, manufacturing machinery or specialist equipment owned outright for several years may represent capital that could be put to better use elsewhere in the business.
What lenders look at in each case
For a new equipment purchase, lenders focus primarily on the business’s ability to service the loan and the value of the asset being acquired. For refinancing existing equipment, the condition, age and marketability of the asset become more significant factors, as the lender needs confidence that the asset holds sufficient value to support the loan. Older or highly specialised equipment may attract a lower loan-to-value ratio than newer, more marketable assets.
In both cases, the trading history and financial health of the business are assessed. Strong, consistent revenue and well-maintained financial records generally support a more straightforward application.
When refinancing existing equipment makes sense
Asset refinancing tends to be most useful when a business needs working capital but does not want to take on unsecured debt or dilute ownership. It can also be a practical option for businesses looking to fund a new opportunity without waiting to build up cash reserves, or for those navigating a short-term cash flow challenge who have assets available to support a facility. It is not the right solution for every situation, but for businesses with owned equipment, it is a funding option worth understanding.
A finance broker can help you compare your options across both new equipment finance and asset refinancing products.
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