If you run a business under your own name, there is no company structure between you and the lender. That is not a barrier in itself, but it shapes the questions you will be asked. Because you and the business are legally the same person, a lender looks at your personal and business position together.
Why the questions are personal
A company can have its own credit file, directors and financials. A sole trader does not. Your personal credit history, your assets and liabilities, and the income of the business all feed into the same picture. That is why you may be asked for ID, details of your personal borrowings and possibly a personal financial statement as well as business information.
What lenders commonly look at
Every lender is different, and none of the following guarantees an outcome. But the usual topics are:
- ABN history. How long your ABN has been active and how long you have traded in this field. Longer histories are often viewed more comfortably.
- Industry experience. If the business is new but you have worked in the trade for years, say so.
- Credit history. Missed payments, defaults and a high number of recent enquiries can all matter.
- Income evidence. Depending on the size of the deal, this can range from simple declarations through to bank statements, BAS or tax returns.
- The asset. Type, age, price, and whether it is supplied by a dealer or private seller.
- Your contribution. A deposit or trade-in can make a deal look stronger, though it is not always required.
Documents worth having together
- Photo ID, such as a driver licence.
- Your ABN and business details.
- A quote or invoice for the equipment.
- Recent bank statements for the account your business income goes into.
- Recent BAS statements or tax returns if you have them.
- Details of existing business loans or leases.
Having these ready can make an enquiry run more smoothly, since there are fewer back-and-forth requests.
Tidy up before you apply
Spend an afternoon on the basics. Check your credit file for errors. You are entitled to request a free copy of your credit report from the credit reporting bodies, and MoneySmart explains how. Make sure your business and personal bank accounts are not hopelessly tangled, because separating them makes your income easier to demonstrate. And avoid lodging several finance applications at once, since each can leave a mark on your file.
Be honest about the numbers
It can be tempting to round income up or hide a late payment. Do not. Lenders verify information, and inaccurate details can lead to a decline or worse. If there is a blemish, explain it briefly and factually. A one-off bad year, a past illness or a client who failed to pay are all explanations that make sense to people who assess business finance every day.
Consider the structure question
Some sole traders eventually move to a company or trust structure, sometimes for tax or liability reasons. That decision belongs with your accountant and has consequences for finance, since a new entity starts without trading history. If you are thinking about it, talk to them before arranging a major purchase.
Think about the repayment, too
Work out what you can sustain in the slowest month of the year. A repayment that suits a busy season but strangles you in winter will be a problem. If your income is uneven, ask whether a different repayment structure is available.
Where to start
When you have the above in hand and a clear quote, you can begin an equipment finance enquiry and a finance specialist can talk through what is possible for your situation. If you want a refresher on the structures involved first, see our chattel mortgage vs lease guide.
Takeaway
Sole traders are regularly considered for equipment finance, but the application leans on you personally, so preparation matters. This is general information only, not advice, and approval is always at the lender's discretion.
