Ways to pay for new business equipment, mixed

A new machine, a second ute, a commercial oven, a CNC router, a fleet of e-bikes for deliveries — equipment is the goal where the thing you’re buying can help pay for itself. The trick is to use everything the purchase brings with it: the old gear it replaces, the supplier’s appetite for the sale, the tax treatment and the security value of the asset itself.

What can fund new equipment before you borrow?

Piece	How it works	Watch out for
Trade-in	Supplier credits the old machine against the new one	Trade-in values can be low; check private-sale value
Selling the old machine	Sell privately or at auction for cash	Downtime between selling and the new one arriving
Supplier deposit and staging	Smaller deposit, balance on delivery or commissioning	Get the payment schedule in the purchase agreement
Refinancing gear you own	Raise cash against other unencumbered equipment	Adds a second facility to manage
Investment Boost	Deduct 20% of the cost of eligible new assets up front	Reduces tax later, not the price today
Your own cash	No repayments	Don’t empty the working-capital buffer

Use the machine you’re replacing

If the new equipment replaces old gear, that old gear is a funding source. A trade-in is convenient, but a private sale or auction can return more. If the old machine has been depreciated for tax, selling it for more than its adjusted tax value creates taxable income, so check the tax effect with your accountant. Our guide on selling business assets: GST and tax explains the mechanics.

Push the supplier

Equipment suppliers want the sale, especially at quarter-end or when they have stock on the floor. Ask about a lower deposit, the balance on commissioning, bundled servicing, or the supplier’s own finance arrangements. Get any staged payment schedule written into the purchase agreement.

Release cash from other gear

If the business owns vehicles or machinery outright, asset refinance can release some of that value without selling anything. It’s a useful way to fund the deposit on new equipment while keeping cash in the bank.

How does Investment Boost change the maths?

Under Inland Revenue’s Investment Boost, a business can write off a fifth (20%) of what it paid for a qualifying new asset straight away, from 22 May 2025, and then depreciate the other 80% in the usual way. Three tests apply: the asset has to be brand new or arriving in New Zealand for the first time (overseas use is fine), it has to be first put to use by the business from that date onwards, and it has to be something you can depreciate for tax. Second-hand gear bought locally doesn’t count, and neither do residential rental buildings or most fixed-life intangibles.

Investment Boost doesn’t lower the price you pay the supplier. What it does is reduce the tax the business pays for the year of purchase, which can ease provisional tax and free up cash later in the year. That’s worth knowing when you’re deciding between new and second-hand gear, and when you plan how quickly a facility should be repaid. Ask your accountant how it applies to you.

Illustrative mix: a Christchurch engineering shop buys a CNC machine

Illustrative only; describes no real business.

A small engineering workshop in Christchurch wants a new CNC machine costing $260,000 including GST.

• Sell the old manual mill and lathe at auction: about $35,000.
• GST: the business is GST-registered on the invoice basis, so the GST on the purchase comes back in the next return, shortening the time that portion is tied up.
• Supplier deal: 10% deposit, balance on commissioning.
• Owner cash: $25,000 towards the deposit.
• Equipment finance on the new machine for the balance, over a term matched to its expected working life.

The workshop keeps its property out of the deal and keeps a cash buffer, and Investment Boost reduces tax in the year the machine goes into service.

If you’re at the point of deciding how the finance piece should look, ask a real person to check it — there’s no credit check to start.

When is equipment finance the right piece, and when is a loan better?

Equipment finance is usually the natural fit: the asset secures the funding, repayments line up with the asset’s working life, and your property stays free for other goals. A general business loan or property-secured facility can be better when:

• the equipment is old, specialised or hard to resell, so it’s weak security on its own;
• you’re buying several smaller items rather than one identifiable asset;
• the purchase is part of a bigger project — a fit-out or second site — and one facility is simpler.

We go through the trade-offs in detail in equipment finance vs a business loan. For software-heavy upgrades, where Investment Boost generally won’t help, see the tech and systems upgrade remix.

What should you prepare before financing equipment?

• A supplier quote or tax invoice showing make, model, serial number and price.
• Recent business bank statements and GST returns.
• How the equipment pays its way — more capacity, lower outsourcing costs, a new contract.
• Details of any equipment you’re trading in or refinancing.

Ready to fill the equipment gap?

Once the old gear, the supplier and your own cash have done their bit, the gap left is what any finance should cover. If you’d like help with that piece, start your enquiry here. It doesn’t involve a credit check, it isn’t sprayed to a list of lenders, and a real person rings you back. Accurate details on the form — the equipment, the price and how it’ll earn its keep — help us suggest the right structure first time.