Plant Now, Factory in FY27: Sequencing Manufacturer Capex
Plant Now, Factory FY27: The Sequence | Switchboard Finance
Manufacturing
Commercial Property · Capex · FY27
Plant Now, Factory in FY27: Sequencing Manufacturer Capex
Most manufacturers hit two capital calls at once near year end: new plant, and the factory they would rather own than lease. Funding both in the same window is rarely the smart play. Here is how to sequence the year so one move never crowds out the other.
Quick Answer
If you need new plant and want to buy your premises, sequence the two rather than stacking them. Fund the equipment first through a chattel mortgage, protect your borrowing capacity, then stage the commercial property purchase into the new financial year.
The year-line sequence: plant now, premises in FY27
Sequencing your capital expenditure across the year-line means funding the urgent asset first and staging the larger one into the next financial year, so neither purchase undermines the other. Most growing manufacturers face the same two calls near 30 June: a piece of plant that is needed now, and the factory they would rather own than keep leasing.
Trying to fund both in the same few weeks is what I call stacking the capex, and it is the quickest way to run short on either deposit or serviceability. The alternative is the year-line sequence: plant now, premises in FY27. The order is the whole game, because the way you finance the first asset decides how much room is left for the second. For a wider view of how the lanes connect, our manufacturing finance hub maps the full picture.
Stage the capex, don't stack it
Staging the capex protects your borrowing capacity for the bigger move, because every new repayment you take on is weighed against your servicing before the next loan is approved. Buy a press or a machining centre now and the commitment is comparatively modest: a chattel mortgage on plant typically runs a 3 to 5 year term, illustrative and varies by lender, with the asset itself as the security.
If the equipment is in use before year end, eligible businesses can also claim the instant asset write-off on it. The 20,000 dollar write-off threshold applies to assets first used or installed ready for use by 30 June 2026 for eligible businesses, and a permanent 20,000 dollar write-off from 1 July 2026 was announced in the 2026-27 Budget but is not yet law. In deals I have seen, the manufacturers who keep their options open are the ones who finance the plant cleanly and leave the balance sheet ready for the property conversation.
Owner-occupier versus lease-doc pathway
The commercial property pathway splits into two, depending on whether you will run the factory yourself or lease it to a tenant. An owner-occupier commercial property loan is for a business buying the premises it operates from, and it is the usual route for a manufacturer buying the factory it currently leases. A lease-doc facility, by contrast, leans on rental income from a tenant.
Lenders weigh the loan-to-value ratio and your servicing here, with a clear exit strategy expected on the facility. If owning your premises is the plan, our guide to owner-occupier commercial property loans for manufacturers and the current commercial property loan landscape are good next reads. The goal is a set-and-forget commercial facility, not a rate you feel you must refinance every year, so the structure you choose matters more than the rate noise around it.
Timing the bigger move into FY27
Timing the property purchase into the new financial year gives the larger loan a cleaner set of figures to be assessed on and keeps it clear of the year-end crunch. The 2026-27 Budget, handed down in May, announced a series of measures that shape capex and property timing into FY27, including a reintroduced two-year loss carry back and changes flagged for property and trusts; you can read the detail on the Treasury site.
These measures are announced, not yet law, so the planning point is simply that there is no longer a hard deduction cliff forcing every purchase into June. That makes plant now, premises in FY27 the cleaner sequence rather than a compromise. The sequence I most often map out with manufacturers is exactly that: finance the equipment cleanly this year, then bring the chattel mortgage and the property loan together into one plan. If you want to pressure-test the order against your own numbers, our manufacturing loan pack is the place to start.
The manufacturers who handle a big capex year well rarely fund everything at once. They sequence it: plant now on a structure that protects serviceability, then the factory in FY27 when the figures are cleaner and the year-end pressure is off. Stage the capex, do not stack it, and protect your borrowing capacity for the bigger move.
Key takeaway: Fund the plant first and stage the commercial property purchase into FY27, so one capital call never crowds out the other.Frequently Asked Questions
Whether to buy plant before EOFY or wait and buy your factory in FY27 comes down to sequencing rather than rushing both in one window. In deals I have seen, manufacturers protect their borrowing capacity by funding equipment first through a chattel mortgage and staging the larger commercial property purchase into the new financial year. The right order depends on your servicing position and the timing of each asset.
Buying equipment can reduce how much you can borrow for commercial property, because each new repayment commitment is counted against your servicing capacity. That is exactly why staging matters: financing plant in a way that preserves headroom keeps the door open for the bigger commercial property loan later. A broker can model the combined position before you commit to either.
A manufacturer can often use a commercial property loan to buy the factory they currently lease, provided the deposit and servicing position stack up. This is an owner-occupier purchase, and lenders typically assess it on the property value, the lease history and your loan-to-value ratio. Our guide to owner-occupier commercial property loans for manufacturers walks through the pathway.
The difference between an owner-occupier and a lease-doc commercial property loan is who occupies the premises and how the income is assessed. An owner-occupier loan is for a business buying premises it will operate from, while a lease-doc loan is assessed largely on rental income from a tenant. Both are forms of commercial property loan, and the right one depends on whether you will run the factory or lease it out.
The instant asset write-off affects a plant purchase by letting eligible businesses immediately deduct the cost of qualifying equipment first used or installed ready for use within the eligible period, rather than depreciating it over years. The 20,000 dollar threshold applies to assets installed ready for use by 30 June 2026 for eligible businesses, and a permanent 20,000 dollar write-off from 1 July 2026 was announced in the 2026-27 Budget but is not yet law. Read more in our instant asset write-off glossary entry.
FBAA Accredited
