Top tips to finance a crane for your business

Crane finance structures that actually work

You have three main options: chattel mortgage, hire purchase, or a finance lease. A chattel mortgage gives you ownership from day one with fixed monthly repayments and a balloon payment at the end, which keeps the monthly cost down and gives you the depreciation. Hire purchase spreads the full amount over the term with no balloon, and you own it at the end. A finance lease means the lender owns it, you use it, and you can upgrade or buy it out when the lease ends.

Consider a construction business in Bulimba that needs a 20-tonne mobile crane. They have $80,000 in working capital but prefer not to drain it. They structure a chattel mortgage over five years with a 30% balloon payment. The monthly repayment sits around $2,800, the business claims the GST upfront, and the depreciation flows through the profit and loss. At the end of the term, they either refinance the balloon, sell the crane, or pay it out. The capital stays in the business for wages, materials, and other equipment.

The chattel mortgage works when you want ownership, tax benefits, and lower monthly repayments. Hire purchase suits businesses that want to own the asset outright without a balloon hanging over them. A finance lease suits operators who turn over equipment every few years or want to keep the asset off the balance sheet.

What lenders look at when you apply

Lenders want to see cashflow, trading history, and whether the crane makes commercial sense for your operation. Most want at least 12 months of trading, though some will go lower if the financials are solid and the deposit is there. They'll look at your profit and loss, your BAS statements, and your bank statements to confirm the business can service the repayment.

If you're a civil contractor working around Bulimba and the surrounding suburbs on infrastructure and residential developments, the crane is tied directly to revenue. Lenders see that connection. If the equipment doesn't match the business activity, they'll ask why. A 50-tonne crane for a shopfitting business raises questions. A 20-tonne mobile crane for a builder doing multi-storey work does not.

Deposit size varies. Some lenders will finance the full amount if the business has strong financials and a clean credit file. Others want 10% to 20% down, particularly if the crane is second-hand or the business is under two years old. The stronger the application, the less you need upfront.

How balloon payments affect your cashflow

A balloon payment reduces the amount you repay each month by deferring a lump sum to the end of the term. It keeps monthly repayments lower, which helps if cashflow is variable or you're funding other equipment at the same time. The trade-off is that you need a plan for the balloon when it comes due.

In a scenario where a Bulimba-based earthmoving contractor finances a crane with a $50,000 balloon over five years, the monthly repayment might be $3,200 instead of $4,500. That $1,300 difference each month can fund another truck, cover insurance, or sit as a buffer during quieter periods. When the balloon is due, they either refinance it over another term, trade the crane in and roll the balloon into new asset finance, or pay it out from retained earnings.

Some operators set aside a portion of monthly cashflow to cover the balloon. Others plan to sell the crane and use the sale price to clear it. Either approach works if it's accounted for upfront. The problem comes when the balloon is ignored until month 59, and then there's no plan.

Tax treatment and depreciation on cranes

Under a chattel mortgage or hire purchase, you own the crane, so you claim the depreciation. Cranes typically depreciate over their effective life, which the ATO sets depending on the type and use. For most mobile cranes, that's between 10 and 13 years. You can also claim the interest portion of each repayment as a business expense.

If the crane costs less than the instant asset write-off threshold and your business qualifies, you can claim the full amount in the year of purchase. Even if it exceeds that threshold, the depreciation still reduces taxable income each year. For a crane costing $200,000, that depreciation adds up.

Under a finance lease, the lender owns the crane, so you can't claim depreciation. Instead, you claim the lease payment as an operating expense. The tax outcome depends on your structure, your accountant's advice, and whether you want the asset on your balance sheet.

GST on commercial equipment finance is claimable upfront under a chattel mortgage or hire purchase if you're registered for GST. That means you claim back the GST on the purchase price in your next BAS, which improves cashflow in the first quarter. Under a finance lease, you claim the GST on each lease payment as it's made.

Vendor finance versus going direct to a broker

Vendor finance is offered by the crane dealer or manufacturer. It's fast, sometimes subsidised, and can be structured on the spot. The rate is usually higher than what a broker can access, and the terms are less flexible. You're also limited to whatever the vendor's preferred lender offers.

Going through a broker gives you access to multiple lenders, better rates, and structures tailored to your business. Premium Finance Group Australia works with banks and non-bank lenders across the country, so we can compare equipment finance options and get you a deal that fits your cashflow, deposit, and tax position. We also handle the paperwork, liaise with the lender, and make sure the finance is approved before you commit to the purchase.

If the vendor is offering a discounted rate as part of a promotion, we can still compare it against the market and tell you whether it's genuine or dressed up. Sometimes vendor deals are solid. Other times, you're paying more over the term than you would going direct to a lender.

How to position the application

Strength in a crane finance application comes from three things: proven income, a clear use case, and a deposit or trade-in that shows commitment. If you're financing a crane to service existing contracts, include those contracts in the application. If you're expanding into a new area, explain the revenue model and how the crane fits.

Lenders want to see that the repayment is covered by the income the crane generates or supports. If your business turns over $1.2 million a year and the crane repayment is $3,500 a month, that's manageable. If turnover is $300,000 and the repayment is $4,000, the lender will want more detail or a larger deposit.

A clean credit file helps. So does a strong relationship with your accountant, because lenders often ask for a letter or a conversation to confirm the financials. If your BAS is up to date, your tax returns are lodged, and your statements show consistent deposits, the application moves quickly.

Frequently Asked Questions