Quick answer
A trust can finance equipment, but the trustee is the borrower, signing as trustee for the trust. Lenders ask for the trust deed to confirm the trustee can borrow and give security, the trust's financials and bank statements, and the trustee's details. With a company as trustee, the directors usually give personal guarantees. The supplier's invoice should be in the trustee's name as trustee for the trust.
Key points
- A trust isn't a legal entity; the trustee borrows and holds the asset for the trust.
- Lenders read the trust deed to confirm the trustee has power to borrow and grant security.
- With a corporate trustee, directors are usually asked for personal guarantees.
- The invoice, finance contract and insurance should all name the trustee as trustee for the trust.
- Have the deed, any variations and the trust's financials ready before you apply.
Yes, a trust can finance equipment, but it’s the trustee who signs, owns and is responsible. The lender will want the trust deed to confirm the trustee can borrow and give security, the trust’s financials and bank statements, and the trustee’s details. With a company as trustee, the directors usually guarantee the deal. The invoice must name the trustee as trustee for the trust.
Trusts are everywhere in Australian small business. Builders, transport operators, medical practices and family farms often trade through one. Equipment finance works for all of them. It just has a few extra moving parts that a sole trader or company doesn’t.
Who is actually borrowing when a trust buys equipment?
The trustee. This is the bit that trips people up.
The ATO describes a trust as an obligation on a person or entity to hold property for the benefit of beneficiaries, and notes that legally it’s a relationship rather than a separate legal entity (trusts, trustees and beneficiaries). The trustee can be a person or a company, and holds the trust property for the beneficiaries.
In practice, that means the finance contract, the PPSR registration and the supplier invoice should all name the trustee, followed by words like “as trustee for” and the trust’s name. “Smith Holdings Pty Ltd as trustee for the Smith Family Trust” is the classic format.
business.gov.au points out that a trustee is “responsible for everything in the trust, including income and losses” and that using a company as trustee can offer some asset protection (business.gov.au trust structure). That’s exactly why most trading trusts have a corporate trustee, and exactly why lenders then ask the directors to guarantee.
What will a lender ask for?
Expect a slightly longer list than for a company or sole trader. The extra items are all about proving the trust exists and the trustee is allowed to do the deal.
| Document | Why the lender wants it |
|---|---|
| Full trust deed, including every variation | Confirms the trustee and its powers to borrow, buy and give security |
| Any deed of appointment or change of trustee | Shows the person or company signing is the current trustee |
| Trustee company details (if corporate) | ACN, directors and shareholders |
| The trust’s ABN and GST registration | Links the trading activity to the trust |
| Trust financial statements and tax returns | Shows trading performance; often the latest one or two years |
| Business bank statements in the trust’s name | Shows cash flow and how existing debts are being met |
| Supplier quote or invoice in the trustee’s name | Matches the asset to the borrower |
| Guarantor ID and asset details | For directors or individuals guaranteeing the trustee |
Lower-documentation options exist for some equipment, but even then lenders almost always want the deed.
Why does the trust deed matter so much?
Because the deed sets the limits of what the trustee can do. Lenders read it to check three things:
- The power to borrow. Most modern deeds give wide powers, but older or home-made deeds sometimes don’t.
- The power to give security. A chattel mortgage gives the lender a security interest over the asset, so the trustee must be allowed to grant it.
- That the trust is still running. Deeds have a vesting date, the date the trust ends. A trust close to vesting raises questions about a five-year contract.
If your deed is missing pages, was varied years ago, or names a trustee who has since changed, sort it out with your accountant or lawyer before you apply. It’s much quicker to fix in advance than in the middle of a supplier’s deadline.
When the paperwork is ready, a quick enquiry is enough to get a real person looking at your structure.
Do directors have to sign personal guarantees?
Usually, yes. A trustee company often has very few assets held for itself. The assets belong to the trust, and the income flows through to beneficiaries. So lenders typically ask the trustee company’s directors to guarantee the finance personally.
Where an individual is the trustee, they’re already personally liable as the contracting party, so the question doesn’t arise in the same way.
Some lenders may relax guarantee requirements for well-established businesses buying mainstream assets, but go in expecting one. The chattel mortgage page explains how security over the asset works alongside any guarantee.
Does a unit trust or hybrid trust change anything?
The basics are the same: the trustee signs, and the deed has to give it the power to borrow and grant security. The difference is who sits behind the trust.
In a unit trust, the unitholders hold fixed entitlements, so lenders often want to know who holds the units and may ask the main unitholders, or the directors of a corporate unitholder, to guarantee. In a hybrid trust, which mixes fixed and discretionary features, expect the lender to read the deed closely to work out who controls it.
Have a current unit register or beneficiary schedule ready alongside the deed. It answers the question before it’s asked.
Which mistakes slow down trust applications?
The same handful come up again and again:
- The invoice is in the wrong name. It’s made out to a director personally, or to a related company, or to the trust’s name without the trustee. The lender will ask for it to be reissued.
- The deed is incomplete. Only the first few pages, or the original deed without later variations.
- The trustee has changed but nobody updated the records. The ABN or bank account still shows the old trustee.
- Two trusts, one business. A family runs a trading trust and an asset-holding trust, and it’s not clear which one is buying. Pick one and keep the documents consistent.
- Financials don’t match the bank account. The trust’s tax return shows revenue going through an account in a different name.
Consistency is the theme. If the borrower’s name is identical across the invoice, contract, bank statements and insurance, the lender has nothing to query.
How does ownership and tax work after settlement?
Under a chattel mortgage, the trustee owns the asset from settlement, for the trust. The ATO’s guidance on who can claim decline in value explains that only the holder of an asset can claim depreciation, and that the legal owner is generally the holder. Under a lease, the financier owns the asset, and the trust claims the lease payments as a business expense instead, subject to your accountant’s advice.
Whether the trust can use the instant asset write-off depends on the ATO’s small business tests, including aggregated turnover under $10 million. Ask your accountant to confirm before you time a purchase around it.
An illustrative example
Illustrative only. A family-owned civil contracting business trades through a discretionary trust with a company as trustee. Two directors run the company. They need a $140k skid steer and attachments for a new subdivision job.
Their first application stalls because the dealer’s invoice names the trust only, and the deed supplied is the 2012 original without the later variation that changed the trustee. The owners ask the dealer to reissue the invoice to “the trustee company as trustee for the family trust”, send the full deed with its variation, and add two years of the trust’s financials and six months of bank statements. Both directors sign guarantees.
The lender has a clear picture, the asset is a mainstream machine with a strong resale market, and the application moves straight to approval. The asset finance page explains why mainstream machines like this are easier to fund.
Trust paperwork in order? Let’s take the next step
If you run your business through a trust, you’re already used to a bit more paperwork than most. The good news is that once the deed, the trustee’s name and the invoice all line up, equipment finance for a trust is straightforward.
The enquiry takes about 60 seconds and there’s no credit check when you first enquire. We don’t send your details to a pile of lenders, so there’s no flood of calls. A real person who understands trust structures reads your enquiry and calls you. Please fill the form in accurately, including the exact trustee and trust names, so we can match the right option the first time.
Frequently asked questions
Can a family trust get equipment finance?
Yes. Many trading businesses run through discretionary (family) trusts and finance vehicles and equipment regularly. The trustee signs the contract in its capacity as trustee, and the lender assesses the trust's trading, the trustee and any guarantors.
Who is the borrower when a trust buys equipment?
The trustee. A trust is a relationship, not a separate legal entity, so the trustee, whether a person or a company, enters the contract and holds the asset for the beneficiaries. Documents usually read along the lines of the trustee's name followed by 'as trustee for' and the trust's name.
Why does the lender want the whole trust deed?
To confirm the trust exists, who the trustee is, and that the deed gives the trustee power to borrow, buy assets and grant security. Lenders also check variations or changes of trustee, so include every amending document, not just the original deed.
Do directors have to guarantee equipment finance for a corporate trustee?
Usually, yes. A trustee company often has few assets of its own, so lenders typically ask its directors for personal guarantees. Some lenders may waive this for strong, established businesses, but it's best to expect it.
What happens if the invoice is in the wrong name?
The lender will usually ask the supplier to reissue it before settlement. An invoice in a director's personal name or a related company's name doesn't match the borrower, which can delay funding or create confusion later about who owns the asset.
Can a trust use the instant asset write-off?
A trust that runs a business can be eligible if it meets the ATO's small business rules, including the turnover test and the timing of when the asset is first used or installed. Your accountant will confirm whether the trust qualifies.