01
Total commitments already full
Each existing facility was comfortable when written. Together they consume the assessed headroom, and the next application is measured against the sum.
Guide
What a lender is actually looking at.
An equipment application is answering two questions at once. Can this business make the payments, and what is this machine worth if it cannot. Almost everything requested exists to answer one of them.
MS
Matt Stiles Editor
Published 7 September 2026 Last reviewed 7 September 2026 Read time 11 min
The short version
Two questions, and what answers them.
- Serviceability comes first. Whether the business can make the payments through a normal quarter and a bad one. Bank statements, financial statements and existing commitments answer this.
- Security comes second. What the machine is worth if the payments stop. Age, hours, condition, the size of the resale market and a clean register search answer this.
- Total commitments bind more often than anything else. A new facility is assessed against everything already owed, which is why a growing business hits a ceiling it did not see approaching.
- A visible purpose helps. A named contract or a displaced subcontract spend gives the repayment a source. It does not guarantee an outcome and it changes the conversation.
- Sector changes the request, not the standard. Rural applications ask for financial statements more often; hospitality asks for the lease. The underlying two questions do not change.
The two questions
Serviceability and security.
Question one
Can the business make the payments.
This is the question that decides most applications, and it is answered from trading evidence rather than from a forecast. Twelve months of bank statements shows what actually came in and went out, financial statements show whether the business is profitable rather than merely busy, and a schedule of existing finance shows what is already committed before this facility is added.
What a credit team is really doing is testing the payment against a bad month rather than an average one. A repayment that fits comfortably in a strong quarter and not at all in a quiet one is the situation that produces arrears eighteen months later, and it is visible in the statements if anyone looks.
This is also why the total commitments question binds so often. Each facility was affordable when written. The sum of them is what the next application is measured against.
Question two
What is the machine worth if they cannot.
The security question is narrower and more mechanical. How old will the machine be at the end of the term, how many hours or kilometres will it have done, how many New Zealand buyers exist for that specification, and how quickly could it be sold.
That last part explains a great deal that otherwise looks arbitrary. A mainstream forklift and a specialised machining centre at the same price attract different terms and different deposits, not because one business is riskier than the other but because one machine has hundreds of plausible buyers and the other has a dozen.
A clean search of the Personal Property Securities Register sits underneath all of it on a used purchase, because a machine already carrying somebody else’s registered interest is not security at all.
The documents
What is typically requested, and what it answers.
Requests vary by lender and by amount. This is the common core rather than a definitive list, and nothing here is a requirement any particular lender imposes.
| Document | Answers | Usually requested | Notes |
|---|---|---|---|
| Quote or invoice for the machine | Security | Always | Asset finance is written against identified equipment, so the file cannot open without one. |
| 12 months of bank statements | Serviceability | Almost always | The primary evidence of what actually moves through the business. |
| NZBN and GST registration | Both | Always | Establishes the entity and its GST position. |
| Financial statements | Serviceability | Above larger amounts, and in rural lending routinely | Statements alone are a poor picture of a seasonal business, which is why accounts matter more there. |
| Schedule of existing finance | Serviceability | Where a business has several facilities | The total is what the application is measured against. |
| PPSR search | Security | Every used purchase | A registered interest attaches to the machine rather than to the seller. |
| Independent inspection | Security | Higher-value used plant | Covers wear on the expensive components rather than overall appearance. |
| Lease or agreement to lease | Security | Where equipment is installed into premises | Decides what happens to the security if the tenancy ends. |
| Contract or engagement letter | Serviceability | Where the purchase is contract-backed | Gives the repayment a visible source with a term attached. |
The common document set on a New Zealand equipment finance application. Illustrative, and not a requirement of any particular lender.
Where applications stall
Six things that commonly go wrong.
None of these are unusual and all of them are visible before an application is made, which is the reason for listing them.
02
A term running past a lease
Equipment installed into premises leased for less than the finance term. Lenders shorten the term or seek a deposit rather than declining, and both raise the cost.
03
A machine older than the term allows
Age caps are set against the end of the term. A machine that would be fifteen years old at expiry attracts a short term regardless of its condition today.
04
Statements that show a tight quiet month
A business that runs close to its limit in a normal quiet month has no room for a further fixed commitment, and the statements show it.
05
An existing interest on the register
A used machine carrying somebody else’s security interest cannot be given as clean security until that interest is settled, which is a process rather than an obstacle.
06
A purpose the lender cannot see
Equipment bought in anticipation of work is a harder application than equipment bought against work already secured. It is not a decline, and it is a different conversation.
Sector differences
Why the request list changes.
The two underlying questions do not change between sectors, and the evidence that answers them does. Rural applications ask for financial statements more often than general equipment lending, because a year of bank statements on a seasonal farming business shows concentrated receipts and long quiet periods that are hard to read as a trading position without accounts alongside them.
Hospitality applications ask for the lease, because most of the sector operates from premises it does not own and a substantial share of a fit-out cannot be recovered from a building the business has left. Construction applications ask for a schedule of existing finance earlier than most, because contractors accumulate facilities faster than they notice. Transport applications ask about the lane or contract, because the amounts are large and a visible repayment source matters more at that scale.
None of that reflects a view about the sector. It reflects what is genuinely uncertain in each one, and an application that supplies the sector-specific evidence without being asked reads as prepared rather than as unusual.
The sequence
What typically happens, and roughly when.
Timings vary considerably between lenders and by amount. These are observations of what commonly happens rather than commitments any lender makes.
01
Same day once a quote exists
The file opens on the machine
A quote naming make, model, year, serial number and condition is what starts the assessment. Pre-approval without a machine exists with some lenders and is commonly re-priced once the specific unit is known, because the security question cannot be answered in the abstract.
Documents commonly required
- Quote or invoice
- Serial or VIN number
- Hour or odometer reading on used equipment
02
1 to 10 working days
The business is assessed
Statements, accounts where requested, and the schedule of existing commitments are read together. This is where most of the elapsed time goes and where most declines happen, and it is the part an applicant can most usefully prepare for.
Documents commonly required
- 12 months of bank statements
- NZBN and GST details
- Financial statements where requested
- Schedule of existing finance
03
Same day to a week
The security is verified
A PPSR search on any used machine, an independent inspection above a threshold that varies by lender, and on installed equipment a look at the lease. Where an existing registered interest is found, settling it from the purchase price at transfer is the ordinary path rather than a barrier.
Documents commonly required
- PPSR search result
- Inspection report where required
- Lease details where relevant
04
1 to 3 working days after acceptance
Terms are offered and settlement follows
On acceptance the financier commonly pays the seller directly rather than paying the business, registers its own interest and requires insurance naming it. The first payment usually falls a month after settlement, or after final delivery where a purchase is staged.
Documents commonly required
- Signed agreement
- Insurance certificate naming the financier
An application that arrives with the statements, the schedule of existing finance and the machine details already assembled moves considerably faster than one assembled during the assessment, and the difference is frequently a week.
Worked scenarios
Three applications, illustratively.
Illustrative scenarios on stated assumptions, showing how the same two questions produce different outcomes.
Six years trading, one existing facility, mainstream machine
The straightforward one
A business with a clean trading record, one modest existing facility and a purchase of a mainstream machine against a named contract is the easy case. Both questions answer themselves, and the assessment is quick.
On these assumptions a $90,000 amount financed at an indicative 11% over 48 months carries a repayment near $537 a week. Nothing about the application is remarkable, which is exactly why it moves.
Indicative figures
- Amount financed
- $90,000
- Term
- 48 months
- Indicative weekly
- ~$537
- Assessment
- Straightforward
Growing contractor, five existing facilities
The one where commitments bind
The security question is fine, because the machine is mainstream and the deposit is available. The serviceability question is where it stalls, because the combined servicing requirement across five existing facilities consumes the assessed headroom.
In this scenario the options are a larger deposit, a shorter term on something being replaced, trading a machine in positive equity to reduce commitments, or hiring rather than buying. All four are real and none of them are about the machine being bought.
Indicative figures
- Existing facilities
- 5
- Security question
- Satisfied
- Serviceability
- The constraint
- Options
- Deposit, trade, or hire
Strong business, highly specialised imported machine
The one where the machine is the problem
A profitable business with clean statements and modest commitments applies for a specialised imported machine with no New Zealand service agent.
Serviceability is not in question. The security question is, because the lender is asking who would buy this machine here and how long it would take, and the honest answers shorten the term and increase the deposit. That is not a judgement about the business, and it feels like one from the applicant’s side, which is why the reason is worth understanding.
Indicative figures
- Serviceability
- Satisfied
- Security question
- The constraint
- Effect
- Shorter term, larger deposit
- Reason
- Resale pool, not the borrower
After a decline
The most useful question to ask.
A decline is rarely explained in detail and is almost always attributable to one of the two questions this guide describes. Establishing which one is the difference between a productive response and a wasted month, because the remedies have nothing in common.
Where serviceability was the constraint, applying to another lender with the same figures commonly produces the same answer, and several enquiries in a short period read as shopping under pressure. The things that change a serviceability position are reducing the amount, extending the term, offering a deposit, or reducing existing commitments by trading something in positive equity.
Where the security was the constraint, the business is fine and the machine was the problem. A different lender with a different appetite genuinely may say yes, particularly a specialist financier where a bank declined, and a different machine almost certainly changes the answer. That is the case where shopping is rational rather than desperate.
Test the maths
The serviceability question, in weekly numbers.
The useful test is whether the figure fits a quiet month rather than an average one, which is the same test a credit team applies. Indicative only, and not a quote or offer of credit.
Indicative repayment
Weekly
$537/week
$2,326 /month $21,653 total interest
$90,000
$5,000 $500,000
4 years
6 months 5 years
11.00% p.a.
8% (secured) 30% (unsecured)
Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.
Sending to Prospa
Your $90,000 scenario
4 years at 11.00% . Prospa will ask a few quick questions, then provide a firm quote and funding if eligible.
Redirecting…
References
Sources
- Personal Property Securities Register
The register searched as part of the security assessment described here.
- Personal Property Securities Act 1999
The statutory basis for the security position lenders are assessing.
- New Zealand Business Number
The identifier requested on essentially every business finance application.
- Inland Revenue, GST registration
The published source for the GST registration details requested in an application.
- Commerce Commission, consumer credit
Backs the note that different obligations apply where a sole trader borrows wholly or predominantly for personal use.
- Financial Markets Authority
Backs the distinction between general information and regulated financial advice.
FAQ
Questions, answered
What do equipment lenders look at first?
Serviceability, meaning whether the business can make the payments through a normal quarter and a poor one. That question is answered from trading evidence rather than from a forecast, and it decides most applications. The machine matters second, and it decides the term and any deposit rather than whether a facility exists at all.
Why do lenders ask for a schedule of existing finance?
Because a new facility is assessed against total commitments rather than against the new machine alone. Several facilities that were each comfortable when written can together consume the assessed headroom, and that position arrives quietly in a growing business. The schedule is how a lender sees it.
How many months of bank statements are needed?
Twelve is the common request. It is long enough to show a full trading cycle including the quiet months, which is the period that actually matters, and short enough to reflect the business as it is now rather than as it was. Some lenders will work with six on smaller amounts.
When are financial statements required?
Above larger amounts as a matter of course, and in rural lending routinely regardless of size. A year of bank statements on a seasonal business shows concentrated receipts and long quiet periods that are difficult to read as a trading position without accounts alongside them.
Does having a contract guarantee approval?
No. A named contract with a defined term gives the repayment a visible source, which helps, and the assessment still turns on the business as a whole and on its total commitments. It changes the conversation rather than deciding it.
Why does the machine affect the term and the deposit?
Because the security question is about what the machine would realise if it had to be sold. Age and hours at the end of the term, the size of the New Zealand buyer pool for that specification, and whether local service support exists all feed into that, and none of them are about the borrower.
What happens if the PPSR search shows an existing interest?
It is a process rather than a barrier. The ordinary path is for the seller’s finance to be settled from the purchase price at the moment ownership transfers, with payment routed through the financier rather than directly between the parties. A seller unwilling to allow that is a reason to pause.
How long does an application take?
Commonly one to ten working days from a complete file, with the assessment of the business taking most of it and the machine verification adding a day or two on a used purchase. An application arriving with the statements, the finance schedule and the machine details already assembled moves considerably faster.
Can a business trading under a year get equipment finance?
Under twelve months it is harder, and a deposit or a personal guarantee is commonly sought. Under six months, asset finance on the machine alone is rarely available and the funding usually has to come from elsewhere. A subcontract or supply arrangement with an established business materially improves the position.
Does a declined application affect future ones?
A credit enquiry is recorded, and several enquiries in a short period can read as shopping under pressure. The more useful response to a decline is usually to understand which of the two questions failed, because the fix for a serviceability problem and the fix for a security problem are entirely different.
Do lenders check the premises lease?
Where equipment is being installed into leased premises, commonly yes. The lease term, any renewal rights and whether the landlord has an interest in tenant fixtures all affect what happens to the security if the tenancy ends, which is why hospitality and clinical fit-outs raise it and mobile plant does not.
Is a personal guarantee always required?
Not always, and it is common on smaller facilities, on newer businesses and in sectors with higher failure rates. It is a separate obligation surviving the company’s position, and where a sole trader’s borrowing is wholly or predominantly for personal use the Credit Contracts and Consumer Finance Act can also apply.
Related
Keep reading
How equipment finance works in NZ
The product this guide describes applying for.
Read onNew against used equipment finance
How the security question changes with the age of the machine.
Read onPPSR checks on used plant
The search that sits underneath the security assessment.
Read onEquipment finance by industry
Why the document request differs between sectors.
Read onEquipment finance by machine
Age and hour thresholds for eleven specific classes.
Read on