Centre pivot irrigation finance for the whole project

A tractor is easy for a credit team to picture: it has a serial number, it drives onto a truck, and if the worst happens it sells at a clearing sale interstate. A centre pivot does none of that. Once the pad is poured and the machine is anchored, it starts to look less like plant and more like an improvement to the land — which raises the question of whether a security interest registered on the PPSR sits ahead of, or behind, a mortgage already registered over the property. Different lenders answer that question differently, and the answer decides whether your deal is straightforward or needs work.

In practice that means three things worth knowing before you apply. Some lenders will fund a pivot as straight equipment finance on the strength of the business, a director's guarantee and the land equity behind it. Some will want the consent of whoever holds the mortgage over the property, which is a conversation to start early rather than the week before settlement. And some prefer to see irrigation infrastructure funded as term debt against the land instead. If the country is leased rather than owned, the deal gets harder again — the finance term has to sit comfortably inside the lease, and the landholder's written consent to the improvement usually becomes a condition.

Equipment finance funds identifiable goods that appear on a supplier's tax invoice with a description you could point at in a paddock. That covers the pivot itself — centre point, spans, towers, gearboxes, tyres, the sprinkler package, the end gun or corner arm — plus the control panel, telemetry, variable rate hardware, the pump, its variable speed drive and any generator or solar array feeding it. All of it finances cleanly. What sits outside that description is the civil work: trenching for the mainline, the concrete pad, laser levelling, earthworks and the electrician's labour. Those are services, and most equipment lenders cannot fund a service.

There are two ways around it. The first is a turnkey contract, where a single head contractor invoices the whole installation as one commissioned system — some lenders will fund that in full, others will still strip out the civil portion, so ask before you sign the supply agreement. The second is funding the gap separately from working capital or cash. Mains power is the item that catches people out: extending three-phase to a paddock a few kilometres from the nearest line can cost more than a span, and a network connection charge is not a good anyone can take security over. Supplier lead times and a deposit on order add a timing gap, since equipment finance normally settles against a commissioned invoice rather than a purchase order.

A water access licence, water share or allocation is a property right in its own right — traded on its own market, held on its own register, and legally quite separate from the steel standing in the paddock. It is not plant, which means it generally cannot be financed as equipment. Growers who need to buy permanent water usually fund it against the land, through a term facility, or from working capital, and the pathways vary by state and catchment. If your project depends on acquiring entitlement as well as building the pivot, treat them as two separate funding conversations and start the water one earlier.

The entitlement still drives the credit decision on the machine, though, because a pivot without reliable water is an expensive sculpture. Lenders who write irrigation deals look at what you hold and how firm it is: high-security versus general-security allocation, carryover rules in your valley, a groundwater bore licence and its metered extraction limit, and whether the megalitres realistically available in a dry year cover the hectares this pivot is meant to run. Set that out plainly in the application — entitlement held, typical allocation across the last several seasons, and what the operation does when allocation is short.

There is no hours meter on a pivot, so the usual used-machine assessment does not apply. What a valuer or a credit team looks at instead is the age and condition of the galvanising, whether the gearboxes and centre drives have been maintained, the state of the spans and tyres, and whether the machine has spent its life on clean surface water or on hard, corrosive bore water with heavy fertigation running through it. Sprinkler packages are a wear item replaced every seven to ten years; control panels and telemetry date faster than the steel, which can last twenty-five years or more.

The catch is that a long physical life does not translate into a deep resale market. Selling a used pivot means someone dismantling it, trucking it, pouring a new pad and running new mainline at the other end — costs that swallow a large share of what the machine is nominally worth, and that only make sense for a buyer reasonably close by. Lenders discount the recovery value accordingly. In practice that pushes structures toward shorter terms than the asset's twenty-five-year life would suggest, and toward modest balloons or none at all. A balloon you cannot refinance against a thin market is a problem you have simply postponed.

Irrigation capital works have a narrow window. The machine has to be erected and commissioned between the last harvest and the next planting, installers book out across that window, pivot supply lead times run to months, and a network connection application can add months again on its own. Finance positioned early is what keeps that sequence intact — it lets you place the order when the installer has capacity rather than when the money finally clears. Large developments are also worth staging: one pivot a season, each stage proving its water and its yield before the next order goes in.

Structure matters for cash flow as much as for cost. Most Australian irrigation equipment is financed under a chattel mortgage, which means your business owns the system from settlement and the lender simply registers security over it. In general terms, that ownership lets a GST-registered business claim the GST input credit on the purchase upfront rather than across the term — on a A$385,000 package that is A$35,000 back on the next BAS, and on a A$1.1M multi-pivot development, A$100,000. Ownership may also open depreciation options. None of this is tax advice, and primary-production rules have their own wrinkles, so confirm the treatment with your accountant before you commit.