Equipment finance case study – how an earthmoving business turned machines into momentum

1) The business at a glance – small earthmoving crew, big pipeline

“Maddox Earthworks” is a six-year-old civil and earthmoving business based in regional Victoria, operating across a corridor that takes in Western Melbourne, Melton, Bacchus Marsh and Ballarat. The owner, Chris, started with one excavator and a tipper and has grown to a team of seven including operators and a supervisor.

The business focuses on drainage, road shoulders, small subdivision work and civil packages for local builders. The core clients are local councils and tier-two civil contractors. Turnover is a little over $2.8 million per year, with margins that are healthy on paper but lumpy in practice because clients often pay 30 days (or more) after invoice.

Over time, Chris has built up a modest fleet:

• Three excavators (2021, 2022 and 2024 models) used on most jobs.
• Two new 2024 Toyota LandCruiser utes for supervisors and towing small plant.
• Access to additional diggers, posi-tracks and trucks via dry-hire when required.

The challenge is simple: most of the business’s capacity sits in yellow goods and vehicles. The gear is in demand and has real value, but that value isn’t doing much to help pay for additional operators, fuel and hire costs when a bigger job lands.

2) The fleet and the equity hiding in the yard

Before talking to a broker, Chris had financed each piece of equipment separately over time. A dealer arranged one excavator loan, a different lender funded another, and the LandCruisers were sitting with a mainstream bank. There was no single view of:

• What each machine was worth now.
• How much was still owing on each facility.
• How much usable equity was tied up in the fleet.

Working with an equipment and asset finance broker, they pulled together current payout figures and conservative market valuations for the core machines:

*Values are indicative only and based on sample auction and dealer data for similar machines in late 2025. Final values and usable equity depend on formal valuations and lender credit policies.

On a conservative view, there was around $240,000 of equity tied up in the fleet. The question was how much of that equity could be sensibly turned into working capital using equipment and asset finance without over-gearing the business or creating a nasty shock when balloons fall due.

3) Two new projects, one funding gap

At the same time as the broker was mapping out the fleet, Chris had just been awarded two local government jobs:

• Job A – stormwater upgrade for a regional council, nine months on site.
• Job B – shared path and drainage works in a neighbouring shire, six months on site but overlapping with Job A.

Combined contract value across both jobs was just under $1.9 million. The gross margin was attractive, but both contracts came with:

• Monthly claims, paid 30 days from approval.
• Strict penalties for delays and extension-of-time arguments.
• Requirements for dedicated crews and machinery on site.

To deliver both jobs properly, Chris needed to:

• Hire two additional experienced operators and one working supervisor.
• Dry-hire extra machines (a second 8-tonne excavator at times, plus a posi-track and an extra tipper on rotation).
• Hold more fuel, materials and small-plant on hand.

The existing overdraft was already stretched, the bank was reluctant to extend unsecured working capital without property security, and Chris did not want to put the family home on the line. On the other hand, the machines in the yard carried real, financeable value.

4) The equipment finance solution – using equity, not the house

Working with an equipment finance broker, the plan was to use simple equipment and asset finance – not leases, and not hire purchase – to refinance the existing loans and release working capital against the equity in the excavators and LandCruisers.

The broker approached a specialist lender comfortable with yellow goods and trade vehicles. Using conservative valuations and the payout figures, they agreed to:

• Refinance the three excavators into a single facility.
• Refinance the two LandCruisers into a second facility.
• Advance up to around 82–83% of the fleet’s market value, leaving a buffer against forced-sale values.

The final structure looked like this (figures rounded and indicative only):

Across both facilities, the lender advanced a total of roughly $500,000 against equipment valued at around $605,000. After paying out the existing $364,000 of finance:

• Approximately $136,000 was released as working capital into the business; and
• All five pieces of equipment were now on clear, simple facilities with fixed rates, 3–5 year terms and known balloons.

The owner understood that extending terms and adding balloons can increase total interest over the life of the contracts. In this case the priority was predictable repayments and enough cashflow headroom to deliver the projects without disrupting day-to-day jobs.

5) Cashflow before and after – what changed?

Before the restructure, Chris was making separate repayments to three different finance companies. Averaged out across the remaining terms, the total monthly repayments on the excavators and LandCruisers were just over $11,000 per month.

After the restructure:

• The new excavator facility required repayments of roughly $6,500 per month.
• The LandCruiser facility required repayments of roughly $2,800 per month.

Combined, the business was now paying around $9,300 per month in equipment finance – a reduction of roughly $1,700 per month in repayments, while also accessing about $136,000 in working capital.

Chris and his accountant earmarked the working capital roughly as follows:

• ≈$90,000 for wages, super and on-costs for additional operators and supervisor over the first few months.
• ≈$30,000 for machine hire, extra fuel and sundry project costs before claims began to flow regularly.
• ≈$16,000 as a buffer in case of weather delays or slow council approvals.

By the time the first few progress payments were received on Jobs A and B, the new crews were bedded in, the extra hire machines were earning their keep, and the overdraft was no longer being used as the default funding tool for every bump in the road.

The important part is not the exact dollar amounts – those will be different for every business – but the shape of the solution:

• Use existing equipment as security instead of the family home.
• Push repayments onto a realistic 3–5 year horizon with known balloons.
• Match the finance terms to the useful life of the machines.
• Ring-fence working capital specifically for hiring people and gear to deliver contracted work.

For a broader view on planning and monitoring business cashflow, the Australian Government’s Guide to managing cash flow is a useful reference alongside your own accountant’s advice.

6) 12-month results and the longer-term impact

Twelve months after settlement of the new equipment finance facilities, both council jobs had been delivered on time. There were minor variations, but no major delays or liquidated damages. The business finished the year with:

• Two completed government projects added to its track record.
• One of the councils inviting tenders for a follow-on package the next financial year.
• An ongoing subcontract position with the tier-two civil contractor on other work in the region.

From a balance sheet and cashflow perspective:

• Equipment repayments were predictable and locked in at fixed rates.
• The balloons were documented and built into a forward “machine replacement” plan.
• The overdraft balance had reduced, rather than grown, over the course of the projects.

None of this was guaranteed at the start. The projects still had to be delivered safely and profitably. But without turning equipment equity into working capital via asset finance, the business would almost certainly have had to walk away from one of the jobs or rely heavily on short-term, expensive unsecured credit.

A key point from the broker’s side was transparency: the structure was designed so that Chris and his accountant could see, in plain numbers, what the repayments, balloons and total debt would look like at each step, and check that it lined up with the business’s realistic pipeline and capacity.

7) When this kind of equipment finance strategy fits – and when it doesn’t

Using equipment and asset finance in this way can make sense if:

• You run a business where yellow goods, vehicles or plant are central to delivering contracted work.
• You have genuine equity in equipment – not brand new machines already geared to the hilt.
• You have signed contracts or very strong pipeline visibility, not just “hoping” for more work.
• You’re prepared for the discipline of making fixed repayments and planning ahead for balloons.

It’s usually a poor fit if:

• Your core issue is lack of profitability rather than timing of cashflows.
• You’re already behind on BAS, tax or existing finance and haven’t spoken to your accountant.
• The repayments plus other commitments would leave little or no buffer for slower months.
• You’re using equipment finance to plug long-term structural holes rather than fund clear, deliverable work.

Equipment finance is a tool. Used well, it can turn “assets sitting in the yard” into a funding bridge for the next step up. Used poorly, it can add repayments without fixing the underlying issues. That’s why the broker, accountant and business owner all need to be on the same page.

8) Next steps if you’re considering a similar move

If you run an earthmoving, civil, transport or trade business and are thinking about using equipment finance to fund growth, a practical next step is to put some structure around the idea rather than guessing.

In simple terms:

Step 1: List your core equipment and vehicles, including make, model, year, hours/kilometres and an honest view of condition.
Step 2: Pull payout figures on any existing equipment finance or chattel facilities.
Step 3: Sit down with your accountant to confirm how much working capital you actually need, and for how long, to deliver the work in front of you.
Step 4: Work with an equipment and asset finance broker who understands yellow goods and small business cashflow, not just headline rates.
Step 5: Compare offers from multiple lenders and choose a structure where the repayments, balloons and terms are realistic for your business, not just “maxed out” to the limit.

Government resources like the ATO’s managing your small business cash flow guidance can also help you think about cashflow habits alongside any finance changes.

How Rate Challenge compares lenders for equipment & asset finance

When Rate Challenge runs a “rate challenge” on your equipment and asset finance, the comparison isn’t just about the interest rate. A broker will look at: the term (typically 3–5 years), balloon size and timing, how much each lender is prepared to advance against the valuation, documentation requirements, early payout flexibility and how the repayments line up with your actual cashflow cycle and contract pipeline.

Rate Challenge compares 35+ lenders for equipment and asset finance and works with business owners across Victoria and Australia-wide. The Equipment Finance Broker page explains how different structures work in more detail, and the Commercial Property Finance Guide gives a feel for how lenders look at business risk more broadly.

When you’re ready to talk through your own numbers, you can use the form above or go straight to the Contact Rate Challenge page. A short conversation with a broker and your accountant can quickly confirm whether releasing equity from your equipment is a sensible next step, or whether a different path makes more sense.