A business rings looking for finance for an excavator.
That’s straightforward enough.
But then, during the conversation, we discover the excavator is only the beginning.
The business is planning to buy a skid steer next month, a new trailer after that and possibly another ute later in the year.
That changes the conversation.
If you know your Rockhampton business is going to purchase several vehicles, machines or pieces of equipment, tell us about the whole equipment plan from the beginning, even if you haven’t found every asset yet.
Depending on the business, the assets and the lender, there may be different ways to approach the funding.
Instead of treating every purchase as a completely unrelated finance application, it may be possible to consider multiple assets together or investigate a broader asset finance facility.
You Don’t Necessarily Need to Have Found Every Asset Yet
Imagine you’re planning the following purchases over the next six months:
$180,000 excavator
$85,000 skid steer
$55,000 trailer
$70,000 work ute
You have found the excavator, but you’re still looking for everything else.
If you tell us only about the excavator, we’re looking at a $180,000 transaction.
If you tell us about the entire plan, we know you’re potentially considering around $390,000 of asset purchases.
That’s important information.
It allows us to look at the proposed borrowing in the context of what the business is actually planning to do.
Can Several Assets Be Financed in One Transaction?
Potentially, yes.
If a business is purchasing several assets around the same time, some lenders may consider multiple eligible assets as part of the same overall finance application or approval.
That could be relevant when a business is:
setting up another crew
replacing several ageing machines
purchasing a truck and trailers
expanding a fleet
acquiring machinery for a new contract
buying several agricultural assets
fitting out a workshop
purchasing several vehicles for employees
The assets don’t necessarily need to be identical.
A business might need a combination of machinery, vehicles, trailers or other equipment.
Whether those assets can be considered together depends on the lender, the assets, the business and the proposed structure.
What If You’re Buying the Assets Over Several Months?
This is where the conversation becomes particularly useful.
Some businesses know they’re entering a period of significant equipment investment, but the purchases won’t all happen on the same day.
You might know you need four machines over the next six months without knowing the serial numbers, sellers or final purchase prices yet.
Depending on the lender and circumstances, a broader asset finance facility or master-style approval may be worth investigating.
Rather than approaching every future purchase as though the lender has never seen the business before, an overall facility may establish an approved limit within which eligible asset purchases can potentially occur.
The precise structure varies between lenders.
Not every business will qualify, and not every lender offers the same type of arrangement.
But if you know several purchases are coming, it’s worth having the conversation before the first asset is financed.
What Is a Master Asset Finance Facility?
Think of it as an overarching asset finance arrangement rather than one loan for one machine.
Subject to the lender’s structure and conditions, a business may have an overall approved facility or limit.
Individual eligible assets can then potentially be financed under that broader arrangement as they’re acquired.
For example, the business might purchase:
Excavator in September
then:
Trailer in November
then:
Skid steer in January
The individual purchases still need to meet the lender’s requirements.
The assets still need to be acceptable.
Documentation and settlement requirements still apply.
But the broader credit position may already have been considered as part of establishing the facility.
A Facility Isn’t a Blank Cheque
This distinction matters.
Having an overall asset finance facility doesn’t necessarily mean:
“You’ve been approved for $500,000, so go and buy anything you like.”
There can still be conditions around individual purchases.
Depending on the lender, those can include matters such as:
acceptable asset types
age of equipment
purchase price
seller
valuation
remaining facility availability
documentation
security requirements
changes in the business’s circumstances
the period for which the facility or approval remains available
The facility creates a framework for future purchases.
It doesn’t remove the lender’s requirements for the assets being financed.
What Does a Drawdown Mean?
You’ll sometimes hear the term drawdown used with facilities.
In simple terms, it means using part of an approved facility for an eligible purchase.
Suppose a business has an approved asset finance limit and first purchases a $150,000 machine.
That purchase may use part of the available facility.
When the business later finds another eligible asset, it may seek to use another portion of the remaining facility, subject to the applicable lender and facility requirements.
This can be useful for a business undertaking a staged equipment programme rather than buying everything at once.
Does Every Asset Have to Be on Exactly the Same Loan?
Not necessarily.
An overall facility doesn’t always mean putting every asset into one giant loan with one identical term.
Depending on the lender and facility structure, individual assets may be documented or financed separately within the broader arrangement.
That’s useful because different assets can have very different characteristics.
A new prime mover isn’t the same asset as a used trailer.
A new excavator isn’t the same as a ten-year-old piece of machinery.
A work ute isn’t necessarily going to have the same expected ownership period as heavy equipment.
Where the facility allows it, individual purchases can potentially be structured according to the relevant asset and transaction while still sitting within the broader approved arrangement.
What If You’re Buying From Different Suppliers?
That can also be relevant.
A business expansion doesn’t necessarily involve walking into one dealership and buying everything.
You might buy:
an excavator from an equipment dealer,
a used skid steer from another business,
a custom trailer from a manufacturer,
and vehicles from a motor dealer.
Different sellers create different settlement and verification requirements.
Private purchases, in particular, require appropriate seller and ownership verification and checks around existing security interests.
A broader facility doesn’t remove those requirements.
Each transaction still needs to be properly completed.
Why Should You Tell Your Broker About Purchases That Haven’t Happened Yet?
Because the lender you’re considering for the first asset may not be the lender or structure we’d consider if we knew the complete plan.
Suppose you tell me:
“I need $150,000 for an excavator.”
That’s one conversation.
Now tell me:
“I need the $150,000 excavator now, but we’re expecting to spend another $450,000 on equipment over the next nine months.”
That’s a different conversation.
The first purchase may affect the business’s borrowing position when the next application arrives.
Total exposure can matter.
Cash contributions can matter.
The timing of purchases can matter.
The type of assets can matter.
Knowing what is coming allows us to think beyond today’s invoice.
One Approval Isn’t Always Better Either
A master facility or multi-asset approval can sound automatically preferable.
It isn’t.
For some businesses, separate finance applications may make more sense.
Perhaps the purchases are too far apart.
Maybe the future equipment requirement is uncertain.
The asset types may suit different lenders.
A particular machine may fit one lender exceptionally well while another asset fits somewhere else.
The business’s circumstances may also change between purchases.
The point isn’t that every growing business should have a master facility.
The point is that we should consider the option when the business has a genuine programme of upcoming asset purchases.
Multiple Assets Can Also Be Purchased at Once
Not every multi-asset transaction needs a longer-term facility.
Sometimes the business has already found everything.
For example, a civil contractor may be buying an excavator, skid steer and trailer together so another crew can begin work.
In that situation, we can look at the purchases collectively and investigate whether the assets can appropriately be financed as part of the same overall transaction or whether there is a reason to structure them separately.
Again, it depends on the lender and circumstances.
Think About the Total Commitment
A business owner can look at each purchase individually and think:
That repayment is manageable.
But four manageable repayments can become a substantial overall commitment.
That’s why I want to understand the entire programme.
If you’re planning $600,000 of asset purchases, we need to think about the business after the $600,000 has been spent, not simply whether the first $150,000 transaction works.
What will the new assets contribute?
Will they replace hire costs?
Are they supporting new contracts?
Are they replacing equipment that’s already financed?
Will additional employees be required?
How much additional fuel, insurance and maintenance will the business carry?
When will the additional revenue begin?
The equipment finance sits inside that bigger commercial picture.
Don’t Forget Working Capital
A business can have all the machinery it needs and still run short of cash.
More equipment can mean more work.
More work can mean more wages, fuel, materials and operating expenses before customers pay their invoices.
If you’re undertaking a major equipment expansion, tell us about that too.
The asset purchase programme and the working capital requirement aren’t necessarily financed in the same way, but they should be considered together when you’re planning the expansion.
There’s little value in successfully funding another crew’s equipment if the business hasn’t allowed for the cash required to operate that crew.
What Should You Tell Us?
If you’re planning several purchases, you don’t need a final invoice for every future machine before speaking with us.
Start with the plan.
Tell us:
what you need
approximately what it will cost
what you’ve already found
what you still need to find
when you expect to purchase each asset
whether the assets are new or used
whether you’re replacing equipment or expanding
why the business needs the additional assets
what existing asset finance the business already has
From there, we can look at the funding requirement as a whole.
Planning Multiple Equipment Purchases in Rockhampton?
Thrive Broking assists businesses in Rockhampton and across Central Queensland with finance for eligible vehicles, machinery and equipment.
If you’re buying one asset, tell us about that asset.
But if that purchase is the first part of a much bigger equipment programme, tell us about the rest as well.
Depending on your circumstances and lender criteria, we can investigate whether individual finance, a multi-asset approval or a broader facility-style arrangement may be appropriate.
You don’t necessarily need to wait until you’ve found every machine before starting that conversation.
Sometimes the most useful finance discussion happens before the first purchase, when we can still see the entire plan.
All finance is subject to lender eligibility, assessment, approval, asset eligibility, facility conditions and applicable terms and conditions.