Every term,
in plain English.
Equipment finance is riddled with jargon. This is the straight-talking version — what each term actually means and why it matters.
51 terms operators run into.
ABN
Australian Business Number. Required for most commercial equipment finance. Some pathways accept new ABNs.
ACN
Australian Company Number. Issued to registered companies (Pty Ltd). Lenders use it to verify a company borrower and its directors.
Amortisation
The gradual paying down of a loan’s principal through regular repayments over the term, so the balance reduces to zero (or to a balloon) by the end.
Arrears
Repayments that are overdue. Falling into arrears can affect your credit file and future borrowing, so flag cashflow pressure early.
Asset-Backed Finance
Finance approved on the strength of the asset being purchased (and sometimes other assets you own), rather than purely on financial statements. Often opens up better terms.
Balloon Payment
A lump sum due at the end of a finance term, after regular repayments. Reduces monthly payments but leaves a larger final amount.
BAS
Business Activity Statement. The form GST-registered businesses lodge to report and pay GST. Equipment GST credits are usually claimed through your BAS.
Business Structure
How your business is legally set up — sole trader, partnership, company (Pty Ltd) or trust. It affects who guarantees the loan, tax treatment and the documents lenders ask for.
Cashflow
The money moving in and out of your business. Finance structures (balloons, seasonal repayments, contract-aligned terms) are often built to protect cashflow.
Chattel Mortgage
A loan secured against equipment you own from day one. Interest and depreciation are typically tax-deductible. The most common structure.
Collateral
An asset pledged as security for a loan. If repayments stop, the lender can recover the collateral. In equipment finance the asset itself is usually the collateral.
Comparison Rate
A rate that bundles the interest rate with most fees into a single figure, so you can compare offers on a like-for-like basis rather than headline rate alone.
Conditional Approval
An in-principle yes from a lender, subject to conditions (e.g. final invoice, asset inspection, supporting documents). Not yet a settled, drawn-down loan.
Contract-Aligned Finance
A structure where the repayment schedule matches a specific contract’s revenue profile (e.g. milestone payments, seasonal uplift).
Credit Score & Credit File
Your business and personal credit history held by credit bureaus. Each formal application can leave an enquiry, so a broker pre-checks lender fit before lodging.
Deposit
Upfront payment reducing the financed amount. Not always required but can improve approval and terms.
Depreciation
The accounting decline in asset value over time. Tax-deductible in chattel mortgages and hire purchase structures.
Drawdown
The point at which loan funds are released — to the seller at settlement, or in stages for progress-paid builds.
EOFY
End of Financial Year (30 June in Australia). A common deadline for equipment purchases targeting the instant asset write-off, as the asset must be in use by then.
Equipment Lease
A structure where the lender owns the equipment and you lease it. Payments are typically a fully deductible operating expense.
Equity
The portion of an asset’s value you actually own — its market value less any finance owing. Equity in existing plant can sometimes support new finance.
Fast Segment
TMF’s pathway for express-track deals under $100K with standardised structures and 24-hour target approvals.
Finance Lease vs Operating Lease
A finance lease puts the asset on your books with the intent to own; an operating lease keeps it off-balance-sheet, more like a rental. The right choice depends on tax and how long you’ll keep the asset.
Fit-Out
The bodywork, equipment or accessories added to a base asset (e.g. a truck body, crane or tipper). Fit-out costs can often be financed alongside the asset.
Full-Doc
A finance application supported by full financials — tax returns, financial statements and BAS. Typically unlocks the sharpest rates for established businesses.
Grow Segment
TMF’s pathway for deals between $100K and $350K with consultant-led assessment and structured option modelling.
GST
Goods and Services Tax (10%). GST-registered businesses can usually claim the GST credit on financed equipment — upfront under a chattel mortgage, or spread under hire purchase.
Head Contractor
The lead contractor responsible for a project, who engages subcontractors. Operators often win machinery work as subcontract packages under a head contractor.
Hire Purchase
A finance structure where you hire the asset with an option to own it at the end of the term. Similar to chattel mortgage but GST is spread across repayments.
Instant Asset Write-Off
A tax measure letting eligible small businesses immediately deduct the cost of qualifying assets rather than depreciating over years. Rules and thresholds change — confirm with your accountant.
Invoice & Debtor Finance
Finance that advances cash against unpaid customer invoices, freeing up working capital while you wait to be paid. Useful for operators with long payment terms.
Line of Credit
A flexible facility you can draw on up to an approved limit and repay as you go, paying interest only on what you use. Often used to smooth working capital.
Low-Doc
A streamlined application requiring less paperwork than full-doc — often used for newer ABNs or asset-backed deals. May carry a slightly higher rate in exchange for speed.
Master Facility
A pre-approved finance facility that lets you draw down for multiple assets without re-qualifying each time.
Overdraft
A facility attached to a business bank account that lets you go into negative up to a limit. Common for short-term cashflow gaps, but usually a costlier way to fund equipment than a structured loan.
Personal Guarantee
A promise by a director or owner to personally repay a business loan if the company cannot. Common on company and trust borrowings.
PPSR
Personal Property Securities Register. Where security interests on movable assets are registered in Australia. Checked before any used or private sale purchase.
Pre-Approval
An indication of how much you can borrow before you’ve chosen a specific asset, so you can negotiate and move quickly once you find the right machine.
Progress Payments
Staged finance drawdowns for staged equipment builds (typical for specialty trucks and fit-outs).
Refinance
Replacing an existing loan with a new one — to lower the rate, restructure repayments, or release equity from an asset you already own.
Residual
Another term for balloon payment. The amount due at end of lease or loan term.
Scale Segment
TMF’s pathway for deals $350K+ with bespoke structuring, multi-lender syndication, and executive-level relationship management.
Seasonal Repayments
A repayment schedule that steps up and down to match seasonal income (common for agriculture, tipper haulage).
Secured vs Unsecured
Secured finance is backed by an asset the lender can recover if repayments stop (usually cheaper); unsecured finance has no such backing (usually dearer, faster). Equipment finance is typically secured by the asset.
Serviceability
A lender’s assessment of whether your business can comfortably afford the repayments, based on income, existing commitments and cashflow.
Settlement
The moment funds clear from the lender to the seller and the asset legally changes hands.
Subcontract
Work won through a tier-1 head contractor. Many infrastructure projects flow to operators via subcontract packages.
Term Loan
A loan repaid in regular instalments over a fixed period. The straightforward backbone structure behind most equipment and business lending.
Tier-1 Contractor
A large head contractor that wins major head contracts directly from government or principals, then distributes work to subcontractors down the chain.
Trade-In
Putting an existing asset towards the purchase of a new one. The trade-in value can reduce the amount you need to finance.
Working Capital
The everyday funds a business needs to operate — covering wages, fuel, materials and bills. Structuring equipment finance well helps preserve working capital.