What is a chattel mortgage for a sole trader?

A chattel mortgage is a common equipment finance option where the sole trader owns the equipment from the start, and the lender holds a mortgage over it as security. Repayments are typically fixed, and the sole trader can claim GST on the purchase price and depreciation, as confirmed by the ATO.

How does the instant asset write-off apply to sole traders?

The instant asset write-off allows eligible sole traders to immediately deduct the full cost of eligible business assets in the year they are first used or installed. For the 2023-24 financial year, the threshold was $20,000 (ex GST) per asset, as detailed by the Australian Taxation Office (ATO).

What documents do lenders typically require for sole trader equipment finance?

Lenders typically require proof of identity, ABN, bank statements (business and personal), recent tax returns, and sometimes a Business Activity Statement (BAS). According to ASIC's responsible lending guidelines, these documents help verify income, affordability, and business viability.

Can sole traders get equipment finance in Australia?

Yes — sole traders can often get equipment finance in Australia, but eligibility usually depends more on the strength of the application than on the business structure alone. If you’re self-employed and looking to buy a vehicle, machinery, tools or other business equipment, it helps to understand ho

Skill level: General guidance
Time: Varies
Trade: Business & Equipment Finance
Updated: 4 November 2026

Can sole traders get equipment finance in Australia?

What key factors do lenders assess for sole trader equipment finance?

Being a sole trader does not automatically rule you out. Many lenders consider applications from sole traders, contractors and self-employed applicants, including newer businesses in some cases. The key issue is whether the lender can verify that the finance is affordable and suitable under its credit policies.

Equipment finance can be structured in different ways. Common options include a chattel mortgage, commercial hire purchase, finance lease or rental-style arrangement. The right structure can affect ownership, repayments, GST treatment and whether there may be a balloon or residual at the end.

Lenders usually look at both the business and the individual. Because a sole trader and the business are legally linked, lenders commonly review personal credit history, business income, bank statements, existing debts and how the asset will be used to generate income.

Low-doc may be possible, but it is not a shortcut. Some lenders offer low-doc or alternative-doc options for self-employed borrowers, often using BAS, business bank statements or an accountant’s letter instead of full financials. These options still involve lender checks and are subject to policy, risk assessment and responsible lending obligations.

Tax and cash flow matter as much as approval. The way finance is set up can affect deductions, GST timing and cash flow planning. The ATO updates tax rules and concessions over time, so it’s important to check current guidance — including whether the instant asset write-off applies to your circumstances — rather than assuming one structure is always best.

What A Specialist Would Review For Your Situation

How long you’ve been trading and how consistent your income is, including whether your revenue is seasonal, contract-based or growing.

Which finance structure best fits the asset and your tax position, such as whether ownership upfront, lower monthly repayments or flexibility at the end is more important.

Your available documentation, including tax returns, BAS, bank statements, accountant-prepared figures or low-doc alternatives that may suit a self-employed application.

The asset itself, including age, condition, supplier, intended business use and whether the lender is comfortable with that type of equipment.

Your broader commitments and cash flow, such as mortgages, personal loans, ATO payment arrangements, credit cards and existing business facilities that may affect serviceability.

Common Costly Mistakes

Assuming ABN registration alone is enough without preparing income evidence and up-to-date financial documents.

Choosing the wrong finance structure based only on the lowest repayment, without considering balloon payments, GST treatment or end-of-term obligations.

Applying with multiple lenders at once, which can create unnecessary credit enquiries and weaken the overall application.

Not checking current ATO and ASIC guidance, especially around tax treatment, disclosures and what a lender will want to see from a self-employed borrower.

When To Get Professional Help

If you’re self-employed, have variable income, are short on standard documents or want to understand low-doc options, it usually makes sense to get help before applying. DIY research is useful, but once you’re comparing structures, tax implications and lender policies, a finance specialist can help narrow down what may realistically fit your situation.

Talk To A Specialist

If you’d like clarity on how sole trader equipment finance generally works and what lenders may look for, the sensible next step is to speak with a specialist. You can get matched with a finance specialist here: /finance/enquire?service=finance

Frequently Asked Questions

Can a sole trader get equipment finance with only an ABN?

Sometimes, but an ABN on its own is not usually enough. Lenders commonly want to see evidence of trading activity, income and affordability, which may include tax returns, BAS, bank statements or other supporting documents depending on the lender and the type of application.

Is low-doc equipment finance available for sole traders?

In some cases, yes. Low-doc equipment finance may be available where a lender can assess the application using alternative documents such as BAS, business bank statements or an accountant’s declaration, but approval is still subject to lender criteria and verification requirements.

Do sole traders need a deposit for equipment finance?

Not always. Some equipment finance deals may be available without a deposit, while others may work better with a contribution upfront depending on the asset, the borrower profile and the lender’s policy. A deposit can sometimes improve the overall application, but it is not universally required.

What do lenders look at for self-employed equipment finance?

Lenders typically assess income consistency, time in business, personal and business credit history, existing liabilities, bank conduct and the type of equipment being purchased. For sole traders, they may also look closely at how the asset supports business income and whether the repayments appear manageable.

Can I claim tax benefits on financed business equipment?

Potentially, but it depends on the structure of the finance, how the asset is used and your tax circumstances. The ATO sets the rules, and concessions such as the instant asset write-off can change over time, so it is worth confirming current eligibility with your accountant or registered tax adviser before acting.

Important — General Information Only

This information is general in nature only and is not personal business or equipment finance advice. It does not take into account your objectives, financial situation or needs, and you should consider your own circumstances and seek advice from an appropriately licensed or registered professional before acting, such as a finance specialist, accountant or registered tax practitioner. Lending is subject to lender criteria, credit assessment and responsible lending obligations under the National Consumer Credit Protection framework. For current guidance, see ASIC and Moneysmart for finance and credit information, and the ATO for tax treatment including any instant asset write-off rules.

Frequently asked questions

Can a sole trader get equipment finance with only an ABN?: Sometimes, but an ABN on its own is not usually enough. Lenders commonly want to see evidence of trading activity, income and affordability, which may include tax returns, BAS, bank statements or other supporting documents depending on the lender and the type of application.
Is low-doc equipment finance available for sole traders?: In some cases, yes. Low-doc equipment finance may be available where a lender can assess the application using alternative documents such as BAS, business bank statements or an accountant’s declaration, but approval is still subject to lender criteria and verification requirements.
Do sole traders need a deposit for equipment finance?: Not always. Some equipment finance deals may be available without a deposit, while others may work better with a contribution upfront depending on the asset, the borrower profile and the lender’s policy. A deposit can sometimes improve the overall application, but it is not universally required.
What do lenders look at for self-employed equipment finance?: Lenders typically assess income consistency, time in business, personal and business credit history, existing liabilities, bank conduct and the type of equipment being purchased. For sole traders, they may also look closely at how the asset supports business income and whether the repayments appear manageable.
Can I claim tax benefits on financed business equipment?: Potentially, but it depends on the structure of the finance, how the asset is used and your tax circumstances. The ATO sets the rules, and concessions such as the instant asset write-off can change over time, so it is worth confirming current eligibility with your accountant or registered tax adviser before acting.
What is a chattel mortgage for a sole trader?: A chattel mortgage is a common equipment finance option where the sole trader owns the equipment from the start, and the lender holds a mortgage over it as security. Repayments are typically fixed, and the sole trader can claim GST on the purchase price and depreciation, as confirmed by the ATO.
How does the instant asset write-off apply to sole traders?: The instant asset write-off allows eligible sole traders to immediately deduct the full cost of eligible business assets in the year they are first used or installed. For the 2023-24 financial year, the threshold was $20,000 (ex GST) per asset, as detailed by the Australian Taxation Office (ATO).
What documents do lenders typically require for sole trader equipment finance?: Lenders typically require proof of identity, ABN, bank statements (business and personal), recent tax returns, and sometimes a Business Activity Statement (BAS). According to ASIC's responsible lending guidelines, these documents help verify income, affordability, and business viability.

Written by Capital, the Business & Equipment Finance specialist at Aus.Tools.