Equipment Financing for Tradies

Regardless of whether you are a painter, a builder, general handyman, carpenter, or any other type of tradie you will need to have a selection of good quality tools and equipment in order to be able to do your job. While purchasing one or two small tools is usually affordable, you may not be able to pay for everything without obtaining some type of loan or grant.

An equipment finance broker can help arrange leases or loans for important equipment you need as a tradesman.

There are a few options when it comes to obtaining equipment financing for tradies, and we cover some of the most popular choices here.

Trade Support Loan

If you are new to your trade and working in an apprenticeship position, you can apply for a Trade Support Loan. This is a government loan that is paid in installments over four years, totaling up to $20,000. This type of loan is intended to help apprentices with their everyday costs and equipment purchases while they are working through their apprenticeship. While a Trade Support Loan is available in New South Wales, it may not be in other parts of Australia. Check with your local government for further information.

Finance Lease for Capital Investments

These types of leases apply to equipment, machinery, trucks and other items necessary for tradesmen and builders to perform their daily job tasks.

In a finance lease, the lessor or financier purchases the equipment and leases it to the tradie. The tradie, or lessee, then makes a set amount of rental payments in return for the use of the equipment. This type of financial arrangement is often used to minimise capital expenditure, for example, for truck finance and truck loans, machinery finance, machinery loans, machinery leasing, etc.

Depending on the type of equipment leased, the duration of the lease is typically one to five years, and payments are calculated on fixed interest over the duration. Equipment lease finance payments are typically tax deductible and GST payments can be claimed during the lease and on the end value of the equipment.

Novated Lease

This is a lease agreement between an employer, employee, and financier. Under this type of lease, the financier owns the equipment and the tradie, or lessee rents it and makes regular payments for the duration of the lease. At the end of the lease, the tradie will have the option to purchase the equipment if he or she wants to.

A novated lease is a little different from a regular machinery finance lease because the employer is actually responsible for the repayments, even though it is the employee making them. The employer deducts the equipment lease payments directly from the pre-tax salary, ensuring that the lease payments are made on time. This type of transaction is otherwise known as salary sacrifice or packaging.

With this type of machinery financing, the employer is responsible for FBT, which is usually passed on to the employee. The lease terms is typically one to five years and payments are fixed for the term of the lease.

Other Financing Options

Other equipment financing options include personal and business loans offered by various lending institutions and banks. The best way to find out what the best type of equipment financing is for your specific needs is to talk to your financial planner or adviser.

Here at Tradebusters Academy  we are committed to helping tradesmen and builders succeed in business with numerous tips for tradies, events, and trusted service providers.

If you do need a good financier for your trade business, why not contact one of the listed financiers for tradies on this website.  And also check out some of the special offers they have for you.