Equipment Finance for Contractor: Finance the support gear that helps broader job delivery, Not Everyday Spend

Contracting has the widest gear range and the highest potential outlay of any trade

The equipment list for a general contractor depends entirely on the work you take on. That's exactly what makes the finance decision more complex than most trades.

Excavators run $50K-150K. Telehandlers and forklifts sit between $80K and $200K. Scaffolding systems can cost $10K-50K for a meaningful stock. Site sheds, portable amenities, temporary fencing -- they add up fast. Then there's concrete tools, compaction equipment, power tools, generators, lighting rigs, and safety gear across the operation.

Here's the key difference from specialist trades: your equipment needs shift with every project. A house builder needs different gear from a civil contractor doing subdivision work. A commercial fit-out operator needs different tools from someone doing demo. Before you start financing anything, get clear on what work you're actually building the business around. Financing a $120K excavator when your core work is residential renovations is solving the wrong problem.

When wet hire costs are eating your margin on every single project

Most general contractors start by hiring plant project by project. Wet hire on a 5-tonne excavator might cost $1,200-1,800 a day including the operator. Dry hire without the operator runs $500-800 a day.

Look, if you're hiring an excavator for 10 or more days a month consistently, the annual hire cost can exceed $60K-100K. At that point, financing your own machine at $2K-3K a month in repayments makes obvious financial sense.

The other trigger is project control. When you rely on hired equipment, you're at the mercy of availability. Hire company can't deliver the telehandler Monday morning? Your entire crew is standing around. For builders running multiple concurrent projects, that control over plant availability is worth more than the interest cost on the finance.

The biggest trap is financing too much plant too early in the growth curve

Real talk: I've seen more contractors get into trouble by over-financing plant than almost any other trade. The temptation is real. You land a big project, the margins look healthy, and suddenly a $150K excavator seems affordable.

Then the project finishes. The next one is delayed by three months. And you're making repayments on a machine sitting in the yard. Plant finance only works when the utilisation rate stays high. Rule of thumb: if the machine isn't earning at least 60 percent of available working days, you're probably better off hiring it.

Scaffolding is another area where contractors over-capitalise. Buying $40K worth of scaffold stock feels productive -- but if half of it sits in the yard because your jobs don't all need it at once, you've tied up capital for no return. Own enough for your typical job size. Hire the extras for the bigger projects. Same logic applies to temporary fencing, site sheds, and other project infrastructure.

Chattel mortgage for plant you'll keep long-term -- operating lease for gear that depreciates fast

For major plant like excavators and telehandlers, chattel mortgage over four to five years is the standard approach. These machines hold reasonable resale value -- especially the major brands like Kubota, CAT, and Komatsu. You claim the GST upfront, depreciate the asset, and at the end of the term you own a machine that still has market value.

A five-year chattel mortgage on a $100K excavator puts repayments around $1,800-2,200 a month depending on rate and residual.

For equipment that depreciates faster or that you might outgrow -- compaction gear, smaller generators, survey equipment, laser levels -- operating leases offer more flexibility. Slightly higher monthly cost than chattel mortgage like-for-like, but you hand the gear back and upgrade without worrying about resale. Some larger contractors also use an equipment finance line of credit -- a revolving facility where you draw down as needed for new purchases. Suits businesses with ongoing equipment acquisition rather than one-off big buys.

Finance when utilisation justifies ownership -- not when a good deal appears

Equipment dealers will always have a deal on right now. End of financial year, demo stock, trade-in specials. Ignore the urgency.

The question is always the same: will this machine be earning money at least three weeks out of four for the duration of the finance term? If yes, finance it. If the answer depends on winning work you haven't got yet, wait.

The exception is when a genuinely underpriced piece of plant appears -- like a well-maintained excavator at $30K below market from a retiring operator. The discount itself can justify the finance because you're buying below replacement cost and could sell for more than you owe if the work doesn't materialise. But those situations are rare. Most of the time the urgency is manufactured by the seller, not by your business needs.

If the machine isn't earning at least three weeks out of four, hire it. If it is, own it.

General contracting is the trade where equipment finance can create the most value or the most damage. The difference is utilisation.

Every piece of financed plant should be tied to actual, recurring work. Yard queens with monthly repayments are the fastest way to turn a profitable building business into a stressed one. Be ruthless about what you own versus what you hire.