Medical and dental practices often need specialised equipment with a substantial upfront cost. Asset finance may allow an eligible practice to acquire that equipment while spreading payments over an agreed term, instead of paying the full purchase price from working capital.
The appropriate structure depends on the equipment, supplier, practice history, cash flow, tax treatment and lender policy. Finance approval is not based on professional occupation alone, and the lowest scheduled repayment is not always the lowest overall cost.
What is medical and dental equipment finance?
Medical and dental equipment finance is business-purpose funding used to acquire eligible practice assets. Depending on the facility, the financed equipment may form part of the lender’s security. Other security, guarantees or contributions may also be required.
Assets that may be considered, subject to lender policy, include:
- dental chairs, treatment units and sterilisation equipment;
- diagnostic, imaging and patient-monitoring equipment;
- laboratory, surgical or specialist clinical equipment;
- practice furniture, fit-out items and eligible technology;
- vehicles or mobile equipment used for business purposes.
Software, consumables, installation, training and fit-out costs may be treated differently from readily identifiable equipment. Confirm which invoice components a lender will finance before committing to a supplier.
Common finance structures
Product terminology varies between lenders, so the contract should be reviewed rather than relying only on the product name. Options may include:
- Equipment loan or chattel mortgage: the practice acquires the asset and the lender takes security over it. A final balloon payment may be available, depending on the asset and policy.
- Finance lease: the lender or finance provider owns the equipment during the lease, and the practice pays to use it under the agreement.
- Hire purchase: the practice pays instalments and ordinarily obtains ownership after meeting the agreement’s final requirements.
- General business loan: this may be considered when the transaction includes costs that do not fit an equipment-only facility.
Ownership, GST, depreciation and deduction outcomes can differ. Obtain accounting or tax advice before choosing a structure. Business.gov.au provides general guidance on leasing or buying business equipment.
New, used and refurbished equipment
New equipment from an established Australian supplier may be easier for a lender to value and identify. Used or refurbished equipment can still be considered, but assessment may involve:
- the asset’s age, condition and expected useful life;
- supplier credentials and a complete tax invoice;
- warranty, service and maintenance arrangements;
- serial numbers, ownership history and any existing security interests;
- an independent valuation or inspection for higher-value equipment;
- whether the proposed finance term extends beyond the equipment’s useful life.
A private sale, overseas supplier or highly specialised asset may require additional checks. Do not pay a non-refundable deposit until the finance conditions and supplier documentation are understood.
Costs and features to compare
Compare the full transaction rather than focusing only on the advertised rate or periodic repayment. Relevant factors include:
- interest rate and whether it is fixed or variable;
- establishment, documentation, valuation and account fees;
- deposit or upfront contribution requirements;
- repayment frequency and loan term;
- any balloon or residual payment at the end;
- early repayment, variation and late-payment costs;
- security over the equipment or other business and personal assets;
- insurance, maintenance and replacement obligations;
- the total amount payable across the facility.
A balloon can reduce scheduled repayments during the term, but it leaves a larger amount to pay, refinance or cover from the asset’s sale at the end. The projected resale value should be considered conservatively.
What lenders may assess
Requirements vary, but a lender may review:
- the applicant’s entity structure, ABN and time in business;
- practice revenue, expenses, liabilities and available cash flow;
- bank statements, financial statements or tax information;
- the practitioner’s qualifications and relevant experience;
- the asset, supplier, invoice, intended use and expected working life;
- credit history and repayment conduct;
- deposit, security and personal-guarantee requirements;
- the effect of the proposed repayment on the practice’s wider commitments.
Some lenders offer streamlined document pathways for eligible established professionals, but this does not mean approval is automatic or that verification is omitted.
Established practice, start-up or acquisition
Established practices
An existing practice may be able to demonstrate historical revenue and repayment capacity. A lender can still examine whether the new equipment is replacing an existing asset, adding capacity or supporting a new service line.
New practices
A start-up may need a business plan, cash-flow forecast, premises information, supplier quotes, evidence of qualifications and a contribution from the owners. The lender may also consider how long the practice must operate before generating sufficient revenue.
Practice acquisitions
Buying an established practice can involve goodwill, patient records, premises, fit-out and equipment. These components may require different finance structures and valuations. An equipment facility alone may not cover the entire acquisition.
Preparing an application
A complete application can help a lender assess the transaction efficiently. Useful documents may include:
- supplier quote or tax invoice with full equipment details;
- business identification and ownership information;
- recent business bank statements and financial information;
- a list of current loans, leases and other commitments;
- details of any deposit, trade-in or equipment being refinanced;
- business plan and cash-flow forecast where relevant;
- insurance, warranty or maintenance information requested by the lender.
Business.gov.au also recommends understanding business income, expenses, debts and cash flow before applying for business finance.
When another finance option may fit better
Asset finance is designed around identifiable equipment. If the main requirement is working capital, rent, wages, inventory or a mixed practice expansion, a broader business finance option may be more suitable. Short-lived cash-flow needs may require a different structure from equipment that will be used for several years.
Where a practice is considering several assets, compare financing them separately with using a single facility. The most suitable approach depends on cost, administration, security and future flexibility.
How GQ Finance can assist
GQ Finance can discuss the equipment, supplier, purchase price, practice structure and available documents, then compare relevant options from suitable lenders. We can help explain lender requirements, indicative costs and the documents needed for assessment.
Learn more about business finance through GQ Finance. Approval, pricing, security and documentation depend on the lender and the complete application.
Frequently asked questions
Can used medical or dental equipment be financed?
Potentially. Lender acceptance can depend on age, condition, supplier, warranty, valuation, useful life and resale market.
Is a deposit always required?
No single rule applies. The required contribution depends on the lender, asset, applicant, transaction and security position.
Can installation and training be included?
Some lenders may include eligible directly related costs, while others finance only the identifiable equipment. Obtain confirmation before signing a supply contract.
Does a medical qualification guarantee approval?
No. Professional qualifications may be relevant, but the lender can also assess cash flow, liabilities, credit history, asset quality, security and supporting documents.
Should the finance term match the equipment’s working life?
The term should be considered alongside the asset’s expected useful life, warranty, replacement cycle and end-of-term payment. Financing an asset beyond its practical life can create additional risk.
This article provides general information only and does not constitute legal, tax, accounting or financial advice. Finance structures, tax treatment, rates, fees and approval requirements vary. Consider obtaining independent professional advice appropriate to your circumstances. GQ Finance Pty Ltd ABN 19 827 707 218. Australian Credit Representative No. 523333.
