Working Capital or Equipment Finance for a Bigger Job
Working Capital vs Equipment Finance | Switchboard Finance
Construction Finance
Working Capital · Equipment Finance · Construction
Working Capital or Equipment Finance for a Bigger Job
Winning a bigger build usually means funding two different gaps at once. One is the labour-and-materials float that keeps the site moving between progress claims. The other is the plant that earns. They are not the same facility, and treating them as one is where cashflow gets tight.
Quick Answer
When a builder scales up, working capital covers the labour-and-materials float that keeps the site moving, while equipment finance funds the plant that earns. One is revolving, the other a term facility against the asset. Bigger jobs often need both, in a non-overlapping split.
A Bigger Job Opens Two Gaps, Not One
A bigger job opens two funding gaps at once, and each needs its own facility. The first is the working capital cycle: wages, subbies and materials that fall due before the next progress claim clears. The second is the plant that earns, the machine or vehicle you need on site to actually deliver the larger scope.
Builders often reach for a single lump of finance to cover both, and where this commonly lands is a stretched line that funds neither cleanly. Separating the two is the structural call a lender wants to see when it sizes a facility. Fund the float with working capital and the plant with equipment finance, and each sits in the lane it was built for.
Working Capital and Equipment Finance, Side by Side
Side by side, the two facilities differ on structure, security, speed and term. Working capital is usually a revolving line you draw and repay as the job moves; equipment finance is a term facility secured against the asset itself. That single difference, revolving versus term, drives most of the others.
The working capital line is built for the labour-and-materials float, so it can fund fast, an approximately 24 to 72 hour fund time, typically, on a clean file, example only. Equipment finance trades that speed for a term matched to the working life of the plant, with the machine as security. That is why the two rarely substitute for each other cleanly.
Where Each Facility Wins
Each facility wins in a different situation, and the fastest way to choose is to ask whether the need is a short float or a long-lived asset. When the pressure is cashflow between claims, working capital moves faster and flexes with the job. When the need is a machine you will run for years, equipment finance spreads the cost across the asset's life and keeps your working capital line free for the float.
Working Capital Moves Faster
- Wages and subbies due before the next progress claim clears
- Buying materials in bulk to hold a price
- A revolving line you redraw as the job moves
- Short gaps measured in weeks, not years
- Funds that can land in approximately 24 to 72 hours, example only
Equipment Finance Moves Slower
- Not a revolving line, once it is drawn it is drawn
- Valuation and settlement take longer to line up
- Secured to the machine, so it will not cover wages or materials
- Built for the working life of the plant, not a weeks-long gap
- Wrong fit when the real pressure is short-term cashflow
None of that makes equipment finance the weaker option. It is simply built for a different job: the plant that earns, financed over its working life. Forcing a long-lived asset onto a short revolving float, or a short cashflow gap onto a multi-year term, is where builders overpay.
How a Lender Sizes the Split on a Bigger Job
When a builder brings both needs to a lender at once, the sizing exercise is really about matching each facility to the cash it is meant to cover, not to the total job value. The working capital line is sized against the gap between progress claims and the running cost of labour and materials inside that gap. The equipment finance is sized against the asset and its useful life. Keeping the two calculations separate is what stops a builder from over-borrowing on one and leaving the other short.
Take a builder stepping up from eight hundred thousand dollar jobs to a three million dollar fit-out. The larger contract stretches the gap between progress claims from a few weeks to a couple of months, so the labour-and-materials float roughly triples, and the same job needs a second machine on site to hold the program. Put both on one facility and the line sits permanently drawn against the plant, leaving nothing for wages when a claim runs late. Split them, and a revolving line flexes with the claim cycle while the machine sits on a term matched to how long it earns. Same total borrowing, but neither facility is asked to do the other's job, and the builder is not refinancing under pressure three months into the build.
The sizing also has to leave headroom. A facility drawn to its limit on day one has nowhere to go when a variation lands or a claim is certified late, both of which are routine on a bigger build. A broker sizing the split will usually build in that slack deliberately, so a normal hiccup in the claim cycle does not turn into a scramble for more finance halfway through the job.
When the Next Job Needs Both
A bigger job often needs both facilities at once, running in non-overlapping coverage. Working capital carries the float between progress claims while equipment finance carries the plant, so neither has to stretch into the other's lane. Structured that way, your revolving line stays free for wages and materials, and the machine sits on a term that matches how long it earns.
As you line up bigger work for the new financial year, it is worth checking the tax side too. The GST you pay on a plant purchase is treated under the standard ATO GST rules, and the after-tax cost of buying outright can shift with the current instant asset write-off settings, so confirm the detail with your accountant. If you already hold plant on finance, refinancing it can free up room before you commit to the next float.
A broker can map the split for your specific job so the two facilities do not overlap or leave a gap. The construction loan pack lays out what a lender wants to see across both, and choosing between facilities is a recurring builder question, the same logic that applies when you weigh a commercial property loan against development finance. Start with the working capital side if the pressure is cashflow, or the equipment finance side if the bottleneck is plant, and size them together.
A bigger job rarely fails for lack of ambition; it stalls when one facility is asked to do two jobs. Working capital funds the labour-and-materials float and moves fast; equipment finance funds the plant that earns and matches the asset's life. Sized together in non-overlapping coverage, they keep the site moving and the machines running without either line straining.
Key takeaway: fund the float with working capital and the plant with equipment finance, then size the two together so neither has to stretch.Frequently Asked Questions
Working capital and equipment finance solve two different problems for a builder. Working capital funds the labour-and-materials float, the wages, subbies and materials that fall due before a progress claim clears, and it usually sits as a revolving line. Equipment finance funds the plant that earns and is a term facility secured against the machine itself. You can read more in our glossary on working capital and equipment finance.
Using a working capital loan to buy equipment is possible, but it is rarely the sharpest structure. A revolving float is priced and sized for short-term cashflow, so parking a long-lived machine on it ties up the line you need for wages and materials. Financing the asset on a matched term through equipment finance usually keeps both lanes clean.
A bigger construction job often needs both, because it opens two gaps at once. The float between progress claims is a working capital job, while any new plant is an equipment finance job, and running them in non-overlapping coverage stops either from stretching. A broker can size the two together against your working capital needs and the job scope.
Equipment finance is typically secured against the asset itself, which is what lets the lender offer a term matched to the machine's working life. Because the security sits in the plant rather than your cashflow, it does not tie up the line you use for wages or materials. Servicing is still assessed on the business, so our note on servicing is worth a read before you apply.
Working capital can cover a builder's cashflow gap quickly, often in approximately 24 to 72 hours on a clean file, as an example only, because it draws on a revolving line rather than a fresh application each time. That speed is why it suits the float between progress claims. When the gap is specifically a delayed claim, our guide on the builder progress claim gap covers the options.
FBAA Accredited
