How to Finance Equipment for your Business
With interest rates at their lowest in decades, it’s not only a great time to buy a property, it’s also a great time to get the equipment you need for your business, or even to start a new one. Getting the money-making equipment you need to succeed is always the first priority for every small business, so talk to us and you could find that our range of equipment financing options offer exactly what you need to make the most of your opportunities.
Why use equipment finance in your business?
Many businesses simply do not have enough cash saved to purchase income generating equipment outright. Buying equipment with financing allows it to be paid for over a number of years, rather than in one payment, which makes it much more affordable.
Equipment financing is also a popular alternative to a standard business loan. That’s because the financing may often be arranged with the new equipment as collateral, reducing your overall financial risk. It also allows you to preserve your savings for use in other areas of your business, should the need arise.
Equipment financing typically allows you to finance 80 to 100 percent of the cost of the equipment you need, so it can potentially save you money on a deposit. Many lenders also offer flexible payment terms to help you maximise your cash flow. There may also be substantial tax benefits and you should check with your accountant to see how they may apply to you.
What kind of equipment financing options are available?
The type of business you have and the purpose of the equipment you need will often determine what kind of equipment finance is right for you. However, generally speaking, we could assist with these different types of equipment financing options:
Chattel Mortgage: This is a straightforward loan where you own the equipment. The equipment itself is used as the security for the loan. Once the mortgage is paid out, you have clear title to the equipment. Most commercial asset finance is done as a Chattel Mortgage.
Asset Lease: An asset lease is an option that leaves the lender to retain actual ownership of the equipment. You pay a fixed monthly lease rental for the term of the lease, then you have the option of paying the residual and taking ownership of the equipment, selling the equipment to pay out the residual, or refinancing the residual to continue the lease.
Commercial Hire Purchase: With this option, the lender purchases the equipment and hires it back to you for a set period of time. At the end of the contract term and when it has been completely paid out in full, you take ownership of the equipment.
Every business is different and it is important to consider each of these financing options carefully before choosing the one that will best suit your particular business and your objectives. We recommend that you talk about your financing options and their tax implications with your accountant before you come to see us to discuss your needs. Please let us know if you need a referral to a reliable accountant.
What kind of equipment can you buy?
Almost any kind of equipment can be purchased using one of these asset financing options, provided it is being used for legitimate business purposes. Some types of equipment commonly purchased with asset financing are:
– Computers and IT Equipment
– Trucks, buses and heavy commercial vehicles
– Company fleet vehicles like cars and delivery vans
– Earthmoving and excavation equipment
– Industrial plant equipment like printing presses, factory and production line machinery
– Agricultural and farming equipment
– Healthcare, scientific and medical equipment
– Hospitality equipment such as restaurant and kitchen fit outs, ovens, fryers and more!
If the equipment you need is not on this list, that doesn’t mean we can’t arrange financing for it! Tell us about your requirements and we’ll help you to get the very best deal available for your particular circumstances and financial situation. As with mortgages, we can source financing from a wide variety of lenders which helps to ensure that you get the right deal for your purposes at a great rate.
If you’re in the market for some new business equipment then it pays to talk to us beforehand. With your financing pre-approved, you’ll have better bargaining power with your suppliers. To find out more about our asset financing services, please feel free to call us any time!