Chattel mortgage · Manufacturing
Chattel mortgage for manufacturing
Manufacturing finance is capital equipment lending combined with working capital for raw materials, covering CNC machines, presses and packaging lines as well as the gap between buying stock and being paid for finished goods.
How a chattel mortgage works for manufacturing
For a GST-registered manufacturer a chattel mortgage over a press, router or packaging line means ownership from settlement and a GST claim on the full purchase price in the next BAS. On a $400,000 machine that is a meaningful cash injection at the exact moment you have just committed capital. Depreciation and interest are deductible. It is the standard structure for plant you intend to run for a decade, which describes most Australian factory equipment — machines here are typically kept far longer than the finance term.
The cash-flow pattern we plan around
Cash out for raw materials, then weeks of work in progress, then 30–60 day terms on finished goods — a cycle that lengthens as the business grows.
What manufacturing typically fund
- CNC machines, lasers and press equipment
- Packaging and materials handling lines
- Raw materials and imported componentry
- Forklifts and factory logistics
- Factory fit-out, power upgrades and compliance works
Chattel mortgage for manufacturing: the numbers
| Typical amounts | $10,000 – $2,000,000 |
|---|---|
| Term | 12–84 months |
| Indicative rates | 6.9% – 14.5% p.a. |
| Repayments | Monthly (weekly or fortnightly available) |
| Speed | 24–48 hours for low-doc up to $150k; longer for full-doc |
| Documents manufacturing usually need | ABN, GST registration and two years of financials · Supplier quote or proforma invoice for the machine · Debtor ledger and aged receivables report |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
Key terms
Manufacturing equipment finance
Manufacturing equipment finance is secured lending for production machinery such as CNC machining centres, laser cutters and packaging lines, often structured to fund supplier progress payments and to commence repayments on commissioning.
Working capital cycle
The working capital cycle is the time between paying for raw materials and receiving payment for the finished goods made from them, during which the business funds the value of that inventory itself.
What is a chattel mortgage?
A chattel mortgage is a business loan used to buy a movable asset (a chattel) such as a ute, truck, excavator or equipment. The business takes ownership immediately and the lender registers a security interest over the asset until it is paid off.
Chattel mortgage balloon payment
A balloon is a lump sum, typically 0–40% of the purchase price, paid at the end of the term. It lowers regular repayments but must be paid, refinanced or covered by selling the asset when the term ends.
Questions from manufacturing
How do manufacturers finance machinery that is built to order overseas?
Progress payments to the manufacturer are funded through a trade finance facility or by the equipment lender, and the whole amount converts to a chattel mortgage when the machine is installed and commissioned. Tell your broker the payment schedule early so the structure is in place before the deposit is due.
How do manufacturers fund raw materials and work in progress?
Trade finance pays suppliers for raw materials with 90 to 180 days to repay, invoice finance advances against finished goods invoices on 30 to 60 day terms, and a line of credit fills the gaps. Together they fund the whole cycle from materials to payment, and the facilities grow with turnover.
Can I release capital from machinery I already own?
Yes. A sale and leaseback or refinance secured on unencumbered CNC machines, presses, lasers and lines can release 60 to 80 per cent of their valuation for working capital or expansion, with the machines staying on your floor. Lenders like recognised brands with strong secondary markets.
Does a supply contract help a manufacturing finance application?
Yes. A contract or purchase orders from a major customer for the product the machine will make are strong evidence of earnings and often move an application from a deposit to no deposit, or from full financials to a lighter assessment. Include them with the machine quote.