Asset finance for a business under 12 months old

A brand new business needs an asset before it's had time to build a history.

It’s an obvious and common scenario we get all the time.

But it is a bit of an awkward spot.

You need the ute or the machine to do the work, but every lender wants to see a track record you haven't had time to build yet.

The good news is it's doable, and I've done it many times, including for businesses that had been GST-registered for a single day.

What's the challenge with a new business?

Lenders want a history of repaying something, and a brand new entity hasn't got one.

This is the part borrowers never think about. It's called comparative credit. Even if you've got a fully paid-off house and a successful business, if the entity applying has never had a loan, a lender can't see a repayment history, and they'll query it.

When they can't see the history, they often ask for a bigger deposit or bank statements to fill the gap.

That's not a wall. It's a hurdle, and there are ways over it. But this is also an uncommon scenario.

What are the options for a business under 12 months?

Three main paths, and they often overlap.

Option One. If the business has been trading for around 6 months and it's in a good position, with a clear sense of what it's doing we can usually place it. The six month mark isn't set in stone, but it's a point where lenders start feeling more comfortable.

Option Two. If the business is a continuation of something older, we can argue the real trading history, not the entity's age. This is the "continuation" case. A truck driver who's been running on a sole trader ABN for years and moves to a Pty Ltd three months ago shouldn't be treated as a three month old business. We can prove the business was already running and get it treated as the longer-standing operation it actually is.

Option Three. If it's genuinely a brand new start, and you need the ute or machine now and don't want to wait six months for the ABN and GST registration to age, we can still get it done, whether that's truck finance for a ute or machinery for the workshop. You'll likely pay a slightly higher premium on the rate for the first while. That's the cost of being new, and it's worth knowing up front rather than finding out later.

Does property security make a difference?

Yes, and it's the single biggest lever for a new business.

If the application is property-backed, lenders will touch it far more readily, because the property gives them something solid to lean on while the business builds its history. In a lot of cases that means no deposit is needed.

If it's not property-backed, you'll probably need a deposit. And honestly, leaving a deposit is a good idea even when it's not required. Lenders like it. It shows you've got skin in the game, and it means they're less likely to go digging deep into the rest of the file, which is exactly what you want when the file is still thin.

Note: A chattel mortgage does not mean you need to put your property up, your asset is the security. It just gives lenders more comfort.

What should I have ready?

The basics are the same as any application: ABN, GST registration, BAS statements if you have them, and bank statements (we don’t usually need them though).

For the full rundown on what each lender asks for, see our piece on low doc vs full doc vs no doc asset finance. For a new business, the bank statements do extra work, because they're often the only evidence of how the business is actually trading. If there's a continuation story, bring whatever proves the business was running before: invoices, contracts, the old ABN records.

The more clearly we can show what the business is doing and that it's heading in the right direction, the easier the conversation with the lender becomes.

What's the realistic outcome?

You’ll get the finance, it just might have a slightly higher rate.

The businesses that do best here are the ones that are honest about where they are. If you're just starting and the numbers show it, we'll get you the asset, and you'll likely pay a little more for it until the business has a track record. Then, once you've got a clean repayment history, the next application gets easier and the one after that easier again.

That's the part worth hearing: new-business finance is a bridge, not a dead end. Get the first asset, repay it cleanly, and the premium disappears on the next one.

Where to from here

If you're a new business and you need an asset, don't assume you have to wait. Come and tell us your situation, including how long you've really been trading and whether you can leave a deposit. We'll tell you honestly what's achievable with asset finance for a business under 12 months old.

General information only. This article provides general information and does not take into account your objectives, financial situation, or needs. Stacked Finance Pty Ltd is a credit representative under Viking Asset Aggregation and provides commercial finance services only. Consider whether the information is appropriate for your circumstances and seek advice from your accountant or financial adviser before acting.