How Banks Assess Larger Equipment Facilities and Master Limits

Lenders sign off on larger equipment facilities and master limits when they can clearly see (1) strong, repeatable cashflow, (2) sensible total gearing, and (3) quality, resaleable assets backing the limit. They assess your ability to afford the full master limit, even if you’re only drawing a portion now, and will usually want repayments covered at least 1.25–1.5 times by ongoing cashflow.

What is a master limit and when does it make sense?

A master limit is a pre‑approved equipment finance ceiling (say $1m) that you can draw down in smaller contracts (for example, $150k trucks or $80k forklifts) over time. Instead of re‑applying for every purchase, you work within that pre‑agreed envelope.

For growing operators, a larger facility or fleet limit usually makes sense when:

• You have contracts that will steadily need more gear (e.g. new freight runs, regular vehicle replacements).
• You’re buying similar, standard assets (trucks, trailers, yellow goods, IT, medical gear).
• You want one set of terms and covenants, not a patchwork of standalone loans.

Worked example:

• Master limit requested: $1.2m
• Initial draw: $400k (2 prime movers and a dog trailer)
• Indicative repayment on full limit (say 7 years at an example 9% p.a. P&I): about $22,800 per month
• Lender wants recurring free cashflow of at least ~$28,500–$34,000 per month to be comfortable (1.25–1.5× coverage).

A master limit lets you draw multiple equipment loans under one overall approval as your business grows.