The easiest way to finance dental equipment

Financing dental equipment in Paddington

Dental equipment purchases are typically tax deductible, and the structure you choose determines how your repayments affect cashflow and what you own at the end of the term. Most practices use either a chattel mortgage or commercial hire purchase, depending on whether they want immediate ownership or prefer to spread the GST component across monthly payments.

Paddington's dental sector is concentrated along Oxford Street and the surrounding residential streets, where established practices often operate from heritage-listed terrace conversions. Upgrading a treatment room in these spaces sometimes means working around structural constraints that influence which equipment fits and how much you'll spend. The loan amount you need should reflect not just the equipment price but also installation and any minor fit-out adjustments.

What equipment qualifies for commercial equipment finance

Most lenders will finance any asset that generates income for your practice, including dental chairs, digital X-ray systems, intraoral scanners, sterilisation equipment, compressors and CEREC milling machines. Computer equipment and practice management software can also be included if they're part of a larger equipment package.

Consider a practice that needs to replace two aging chairs and add a 3D cone beam scanner. The combined purchase sits at around $180,000. Rather than paying cash and draining the operating account, the practice structures it as a chattel mortgage with a five-year term and a residual payment at the end. The dentist claims the full GST upfront, deducts interest and depreciation each year, and keeps $180,000 in the bank to cover payroll, lab fees and leasing costs during quieter months. The fixed monthly repayments make budgeting straightforward, and the equipment is owned from day one, which matters if the practice is sold before the loan term ends.

Chattel mortgage versus hire purchase

A chattel mortgage gives you ownership immediately, so the equipment appears on your balance sheet and you claim depreciation from the first month. You pay the GST upfront and claim the input tax credit in your next business activity statement. Interest and fees are tax deductible as you pay them.

Hire purchase spreads the GST across the life of the lease, which can help cashflow if you're also managing fit-out costs or waiting for patient numbers to stabilise. You don't own the equipment until the final payment, but in practice this rarely creates issues unless you plan to sell the business mid-term. Both structures offer fixed monthly repayments, and both allow you to include a residual or balloon payment to reduce the monthly amount.

How lenders assess dental equipment applications

Lenders look at your practice revenue, time in operation, and whether you're purchasing equipment that's standard for your industry. A CBCT scanner or CAD/CAM system will be approved more readily than something experimental or highly specialised. Most lenders want to see at least 12 months of trading history, although newer practices can sometimes use a director guarantee or combine the equipment loan with a commercial property loan if you're buying your premises at the same time.

If your practice is registered for GST and shows consistent monthly income, the approval process is usually quick. Lenders may ask for recent tax returns, business activity statements, and an equipment quote or invoice. They don't typically require a formal valuation unless the equipment is secondhand or imported.

Structuring repayments to match your cashflow

Fixed monthly repayments let you lock in the cost regardless of interest rate changes during the term. Terms typically range from two to seven years, depending on the equipment's expected working life. A CEREC machine might be financed over five years, while chairs or lights could stretch to seven if that keeps the monthly figure manageable.

A residual payment at the end reduces your monthly commitment but means you'll need to refinance, pay out the residual, or sell the equipment when the term ends. A 20% residual on a $200,000 loan drops your monthly repayment by around $1,000, which matters when you're also managing staff costs, lab fees and commercial rent in an area like Paddington where leases aren't inexpensive.

Upgrading existing equipment without disrupting working capital

We regularly see practices delay upgrades because they're reluctant to touch their cash reserves, even when the existing equipment is outdated or requires frequent servicing. Financing lets you separate the decision to upgrade from the decision to spend cash. If a new scanner cuts your external imaging referrals or a faster mill improves your crown turnaround, the equipment often pays for itself through increased efficiency and patient retention.

In one scenario, a two-dentist practice in Paddington wanted to bring implant planning in-house by purchasing a cone beam scanner and guided surgery software. The total package was $145,000. The practice had the cash but preferred to finance the equipment over four years and keep the funds available for a potential second location. The monthly repayment was around $3,200, and the practice wrote off the interest and depreciation each year. Within 18 months, the scanner had covered its cost through reduced referral fees and an increase in implant cases that previously went elsewhere.

Accessing finance options from banks and specialist lenders

Most major banks offer commercial equipment finance, but specialist lenders often move faster and accept a wider range of equipment types. Some lenders focus specifically on medical and dental practices, and they understand residual values, installation timelines, and how equipment affects your practice's earning capacity.

Rates vary depending on your deposit, trading history, and whether the equipment is new or secondhand. Loan amounts from $10,000 to $1 million are typical, and most lenders don't require property as collateral because the equipment itself secures the loan. If you're also looking at purchasing your premises or refinancing an existing commercial loan, combining the equipment finance with the property loan can sometimes reduce your overall rate and simplify your repayment structure.

What to prepare before applying

Have your recent tax returns ready, along with a profit and loss statement if your accountant prepares them regularly. You'll need a detailed quote or invoice from the equipment supplier, including the make, model, and whether the equipment is new or secondhand. If you're purchasing from overseas, confirm the landed cost including freight, customs, and installation.

Lenders also want to understand your business structure. If the practice operates through a company or trust, they'll ask for director identification and possibly a director guarantee. If you're a sole practitioner, your personal tax return and credit file will form part of the assessment. The process typically takes a few days once all documents are submitted, and funds can be released directly to the supplier or into your business account depending on how you arrange settlement.

Call one of our team or book an appointment at a time that works for you. We'll help you compare equipment finance options, structure the repayments around your cashflow, and get the application sorted without the back-and-forth that comes from dealing directly with lenders.

Frequently Asked Questions